I recently read a blog by the brilliant Ben Carlson whose articles are posted on his site -http://awealthofcommonsense.com/
The article was on the hysteria in the news surrounding financial markets and how the media repeats itself on a regular basis. The article can be found here -http://awealthofcommonsense.com/2017/10/financial-news-doesnt-rhyme-but-it-does-repeat-itself/
I highly recommend people read this article. I’m now sending this to clients and new ‘Engagers’ going forward.
The listing showing the same headlines being published year in year out is amazing. Sooner or later one or some of them will be right but until then, the guessing games will continue. People will be paid to write articles to generate clicks and to add revenue, so the bolder the headline, the more it will be read.
For those of us in the advising space, helping clients tune out the noise is extremely difficult. In fact, tuning the noise out in general is extremely difficult. There is just so much of it. Magazines, blogs, Twitter, Facebook, LinkedIn and newspapers are available and in your face all day every day. Accomplished publications, professional speakers and conferences are all set up to give opinions on markets and the doomsday scenarios on the horizon.
The fight for readership and clicks is showing no signs of slowing down and therefore we, the adviser community, have constant reminders of how important it is to keep clients focused on the plan we’ve created together.
Generally speaking most of the objectives we create with clients are forward looking and long term in nature. Nothing that happens on a day to day basis should alter that client perspective. Markets are outside of our control and always will be. Markets produce volatility and this volatility rewards strategic investors who invest regularly with a long-term mindset.
When the inevitable downturn arises, numerous people will no doubt link to their articles with self-satisfied tones shouting about how they ‘called’ it. Some people will panic, some people will run for the hills and others bury their heads in the sand. When this time comes, and it most certainly will come, this is where real advisers earn their corn.
Helping clients behave their way through downturns is one of the single biggest provisions for long term wealth appreciation through investing. A study in the US found most investors underperformed the funds they invested in by 3-4% solely from bad behaviour.
Buying and selling at wrong times, calling market lows and highs, looking for winners, dismissing losers are all examples of bad human behaviours that can detract from portfolio returns. The financial news hysteria makes these poor calls even more difficult to avoid.
In the end I suppose this blog comes back to the message that I and many other good advisers preach to clients. Control the “controllables” and don’t worry about things outside of your control.
Let the markets do what they are supposed to over the medium term, if you are not looking for a medium to long term investment, don’t make one. Instead, focus time and energy on areas such as your career or your family - where you actually get rewarded (both personally and/or professionally) for that time and energy spent.