Wait . . .what?
A blog entitled “Stop Ignoring Financial News”? Posted on TAAG’s blog? Written by Chip Workman who, on at least a dozen occasions (based on an unscientific audit of past blogs) has promoted ignoring all news and other noise provided by the talking heads in the financial media?
But, before you check your calendar to see if it’s “Opposite Day”, let me explain where I’m coming from and then try to apply it to some of the recent news attempting to explain a market that lately seems to have gone mad.
Increase Your Awareness of Financial Media
There’s no question volatility has returned to the market for at least the time being. In the last several weeks and just the last few days, we’ve seen several up and down days of a percent or more across the major indexes.
A recent Money magazine interview by Pat Reginer (not yet available online – pick up the print version at your local newsstand or a digital copy on GooglePlay or iTunes) features Josh Brown, creator of the Reformed Broker blog, CNBC regular and author of Backstage Wall Street and Clash of the Financial Pundits.
Josh, who admittedly benefits from his participation in the financial media, explains that advising people to ignore the news may be the best advice, but is pointless in today’s world as it turns out very few of us live under rocks.
He suggests an easier approach for the average investor to adopt as opposed to tuning it all out. Josh explains, “My take is to be exposed to financial news all the time, so you can wink at it. Then when you hear a prediction that scares people, you can say, “Yeah, I hear stuff like that every day, and it never matters.” That’s how you deal with the noise.”
He goes on to comment on the media’s tendency to rely too heavily on rules of thumb. “Those kinds of aphorisms are cool. They’re like nursery rhymes. But they’re not particularly helpful.”
And, although he promotes exposing yourself to financial media, he cautions, “Assume everyone has a bias. That bias may be driven by their politics or the way they get paid or the firm they work for. It’s that simple.”
To use the popular phrase of the day, it seems my thinking is evolving in this area. If we’re not willing or able to ignore the noise, a different approach is required. So, go ahead, turn on the tube, pull up a blog or peruse your favorite financial magazine, but take those opportunities to learn what pushes your fear and other emotional buttons. Noise may be unavoidable, but developing the awareness of its very minimal impact on the long term is a powerful shift in how it impacts our thinking.
Why is the Market Going Crazy?
Not unrelated to recent financial news, the number one question we’re hearing is why is this volatility happening? What is causing the market to go down and will it continue?
We haven’t changed our view there. The best answer to those two questions is that no one really knows with any certainty and anyone saying otherwise is making an educated guess at best. Yahoo! Finance contributor Jeff Macke recently provided about as good an answer as I’ve seen. Jeff provides three potential contributing factors and provides perspective as to how best to move forward in the current environment. Take a few minutes to check out the video below.
His last line is one that rings true for us in any market environment. “If you’re in doubt, make an appointment to meet with your financial planner.” We’re here to talk through these issues, and all that relates to you and your money.
Have a great week!