Don’t Let 2020’s “Breaking News” Break Your Investment Resolve

To say the least, 2020 has been a stressful year for most of us. First, there’s the heightened uncertainty (to put it mildly). Then there’s the extra, sheltered-at-home time you may have had to tune into, and become disheartened by the endless BREAKING NEWS streaming 24×7 across your devices.

Unfortunately, too much news glut can be harmful to your financial and emotional well-being alike. How so? Whether you know it or not, your deep-down brain reacts to certain cues, like the color red in a headline (“Made you look!”) or a repeated falsehood, presented as fact (which becomes more believable simply because you’ve heard it more than once).

Believe me, I know exactly what it feels like when you see scary or exciting breaking financial news. Hey, I’m human too. Just like you, my deep-down brain reacts to certain cues every time. Exciting or alarming headlines can suddenly seem super important, even if my higher brain knows better.

Unfortunately, these misleading cues can lead you astray. Before you know it, you’re wondering whether you should ditch your carefully structured, broadly diversified portfolio to chase after the latest, supposedly greatest news. For example, in this 2018 post, I covered five reasons to avoid the then-hot cannabis stock craze; these same reasons apply just as well to the media’s latest darlings such as bitcoins, hedge funds or gold.

We would suggest that investment success comes from keeping your rational resolve across all the crazy news cycles. I’ve covered this before. It starts with having a disciplined financial and investment plan in place. Then you stay in your seat through thick and thin.

How To be Selective About Your Sources

Not every member of the financial press is bad news. For example, consider that study about the color red, described above. I first came across it in a personal finance column by The Wall Street Journal’s Jason Zweig.

The trick is to recognize the dramatic difference between all the nonsense out there versus the reputable financial journalists like Zweig or, here in Canada, Rob Carrick of The Globe and Mail. And let’s not forget the many informational resources we provide here at PWL.

How do you tell the difference? Here are four questions to ask yourself:

1. Is this news playing on my emotions? Does the spokesperson seem excited or worked up themselves? Are they insisting on urgent, crisis-mode action?
2. Is the coverage cursory or deep? Is it delivered as a never-ending spew? Or do they post periodically, thoughtfully, when they have something worth saying?
3. Does the journalist cite rigorous, peer-reviewed data? Or are they focused on grabbing a few soundbites from a fast-talking head?
4. Is the journalist’s personal mission based on advancing your financial wellbeing? Does it say so in their bio? Or are they more about becoming famous by generating junky click-bait?

By running financial headlines through this gamut of questions, you can narrow down your sources to the ones worth considering. It’s not usually the breaking news that counts the most; it’s the enduring insights you need to hear to achieve your personal financial goals – on time, and as planned. I’d like to think our own informational resources are contributing to that cause!