Shane Oliver’s recent article “5 ways to turn down the noise around investing” shares insight into the many global and domestic major events impacting investment markets this year.
The worry list of 2020 thus far: Australian bush fires, US/China trade war, US/Iran tensions, Corona Virus and a China slowdown.
The seemingly never-ending worry list receives an ever-higher prominence as the information age enables the rapid dissemination of news, opinion and noise. The danger is that information overload is making us worse investors as we focus on one worry after another resulting in ever shorter investment horizons.
5 ways to manage the perpetual worry list:
Put the latest worry list in context
Recognise how markets work
A diverse portfolio of shares returns more than bonds and cash over the long-term because it can lose money in the short-term.
Find a way to filter news so that it doesn’t distort your investment decisions
Build your own investment process or choose 1-3 good investment subscription services and relying on them. Simpler still, agree to a long-term strategy with a financial planner and stick to it.
Don’t check your investments as much
Looking at how the share market has gone each month and allowing for dividends, the historical experience tells us you will only get bad news 35% of the time. In contrast, tracking daily movements allows for a 50% chance of bad news.
Look for opportunities that bad news throws up
Periods of share market turbulence after bad news throw up opportunities as such periods push shares into cheap territory.
Read Shane Oliver’s full article here: https://www.livewiremarkets.com/wires/5-ways-to-turn-down-the-noise-around-investing