For many Americans, the stomach-churning market drops, and growing recession talk, triggered by the global spread of the coronavirus are reviving memories of the 2008 financial crisis and Great Recession. In this week’s digest, we revisit articles written during that last market meltdown that carry advice just as relevant today: the importance of keeping perspective and focusing on what you can control.
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The Stock Market and the Media:
Turn It on, But Tune It Out |
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One big challenge faced by individual investors is dealing with misleading information. It’s important to remember that news writers want you to read their stories. They want to grab your attention, which often ends up looking urgent and dramatic. We’ve all seen headlines like “Dow Jones plunges” and though these types of headlines might increase readership, they may not necessarily help you make good financial decisions. In this article from the archives, Dick Davis seeks to inform individual investors on how to separate the meaningful information from the noise, a skillset that many investors could utilize in times like today. Knowing the right way to interpret market news can help us to make smarter decisions about how to manage our investments. When you’re investing for the long haul, reacting to a news story is rarely a smart decision.
Some of the topics covered in the article include:
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The media’s mis-focus
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Effects of “non-news” stories on the markets
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What questions your news source should be answering
In all likelihood, news reporting will stay as it is. So, it is up to you, the informed individual investor, to rise above the misleading media.
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Your Portfolio: Maintaining Perspective |
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In times of financial turmoil, as we are experiencing now, many investors may feel lost in unfamiliar—and extremely discomforting—territory. Financial turmoil can prompt an emotional response that causes investors to flee stock holdings. But doing this can cause long-term harm to your portfolio. Instead, you need to put things in perspective and stick to the fundamental rules of investing.
Some of the topics former AAII staffers John Markese and Maria Crawford Scott cover in this article from the archives include:
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The difference between a bear-market perspective and a long-term perspective
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The importance of putting your total portfolio into context, not just your stock market portion
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Using the fundamental rules of investing to maintain proper perspective
While the historical performance of previous bear markets alone may not provide any specific comfort for your own portfolio today, the topics discussed in this article stand the test of time and can serve as an important reminder to keep things in perspective, practice discipline and focus on what you can control.
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Member Question
The Federal Reserve announced on March 23 new measures to shore up the economy, including unlimited purchases of Treasury and mortgage securities. Do you agree with the various actions that the Fed has been taking in response to the coronavirus pandemic?
A) Yes
B) No
C) Unsure
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Be sure to vote on this week’s question for the opportunity to offer your insights on our open-ended question. |
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Local Chapter Webinars You Can Attend |
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 AAII’s local chapters have made a quick pivot to webinars to present their speakers during the coronavirus lockdown—streamed online and accessible to you from your computer or mobile device. Topics range from portfolio strategies to risk control, data protection and overcoming emotions—all covered in the context of the day’s events. If you’ve ever been curious about local chapter meetings or are just looking for another avenue to high-quality investor education, check out the offerings. It doesn’t matter what part of the country you are located in; you are welcome to attend any local chapter webinar! More » |
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