While I do not consider myself a guardian of the investing public against the “evil empire” of the fourth estate I do occasionally find myself being critical of the news culture that has developed in this country. The advent of 24/7 news coverage has seemed to increase the quantity of information and decrease the quality of knowledge for the public to act upon. In the interest of being fair I truly do not envy the job of a news reporter today. Today’s journalist not only needs to come up with something new and interesting every day, they need to give all the appearance of being an expert on the issue rather than being an interested observer and reporter of what’s going on.
The current bear market certainly has been no exception. If one uses only the popular media as their source one could easily come to the conclusion that the world economically has indeed come to an end with no hope for a change in the future. Those who have experienced bear markets know this is very far from the truth.
Two pieces recently by one journalist, Jason Zweig, serve to “allow” for the other side of the story to be told. “Stop Worrying and Learn To Love the Bear” espouses the value of the long term view and the diversification of a portfolio. The second, “How To Control Your Fears In A Fearsome Market”, explores the emotional reaction individuals experience when confronted with messages that stimulate our fears.
In an unemotional state everyone agrees that successful investing is characterized by cool, level- headed, non-emotional investing. Unfortunately we are human and when presented with stimuli that puts investors in an emotional state we can lose all the attributes that will make us successful wealth stewards. So what’s a person to do? First, remind yourself that investing is a long-term process and not a short-term game. If you cannot ignore the daily news, balance it with some long-term historical perspective. How did portfolios perform in the last down-turn? When were the results positive? You will probably find that the time you are most likely considering a change is at the absolutely worst time. Third, consult your financial advisors to gain additional perspective.
One of the advantages of over 30 years of investing experience is the calming perspective of previous “bad times” and how our economy and markets not only survived but thrived. Do examine all the facts. It will provide you with the perspective to move forward confidently.