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Golden Years Financial

Don’t rely on headlines!

As I’ve previously written and said, modern financial media has become a form of pornography designed to excite people into unhealthy behavior, as illustrated by the never-ending rehearsal and constant re-examination of large-scale events.   There is no shortage of opinions, my own included.

So, please . . .

  1. Don’t rely on headlines.   They don’t reflect what’s actually happening in the market.    We live in an increasingly interrelated global marketplace with trillions of economic actions occurring every single day, all of which combine in the “invisible hand of the market” as described by Adam Smith, the “Father of Economics” in his classic book of 1776.

Remember, sheer proximity in time doesn’t equate to causality.   For example, within a 24-hour news cycle a market index like the S&P 500 may bounce up or down and media-types will simplicitously link it to a recent event despite no evidence of causality  (i.e. “A” does not immediately cause “B” just because they happened in adjacent news cycles or can be used to argue against an unpopular politician or policy).  

  1. Economic recovery usually involves many episodes of gains and losses that can obscure an overall upward trend.
  1. Just a few trading days can be responsible for the largest gains during a recovery.  Therefore, being out of the market can mean missing out on the most profitable periods.

It's important we, as investors, maintain a long-term perspective.   We should be focusing on the next ten years, not the next ten days or minutes.  The events of 2020 have been a great example of things that can't be foreseen.   Choose your philosophy and risk tolerance and then . . .  stick with it!

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Check the background of this financial professional on FINRA's BrokerCheck