Should Today’s News Affect Your Investments?

Should Today’s News Affect Your Investments?

Do you suffer from information overload?

In the current era of social media and high-tech communications, many investors hunt for information on line, mining endless research reports, websites, and blogs.

But you shouldn’t believe every single thing that you read. (Except for this post J)

Just because something is in print or online doesn’t make it true.

Of course, that doesn’t mean that all of the news is tainted. Many media outlets provide worthy data to analyze. But sometimes people relate to this information in the wrong way. Suffering from “media response,” they feel the need to react, which is too bad, since the low correlation between current events and long-term performance, compounded by a deluge of information, causes stress and often leads to poor financial decisions.

The urge to “do something” when you receive new facts can cause suboptimal results in your investing. For some reason, doing something feels better than sitting tight.

Although you should consider the big picture, don’t allow yourself to get overwhelmed by information overload.

When playing chess, don’t fixate on winning the game; think instead which move will improve your current position the most. And when you are selecting investments, don’t get preoccupied with how each choice may affect your ability to pay for your child’s tuition or fund your retirement. Instead, confirm that the type of investment fits into your asset allocation model, and then look closely at the specific security to make sure that it makes sense for you.

Sometimes you must work on your big picture decisions, and sometimes on your tactics. Don’t let an outside influence, especially one as powerful as the media, direct your energies to the wrong place.


Douglas Goldstein, co-author of Rich As A King: How the Wisdom of Chess Can Make You A Grandmaster of Investing, avid chess fan, international investment advisor and Certified Financial Planner (CFP®)