Written by, Dave Young, President & Founder of Paragon Wealth Management
I encourage you to learn more about investing and planning. It will pay dividends in many ways, and we are here to assist you as you take steps to educate yourself.
But I caution you about spending too much time in front of the financial news channels dotting the cable landscape or the many Internet sites that are just a mouse click away.
It’s not that they don’t report hard news. They do. But there are times when markets get volatile and the “shrillness meter” hits alarming levels.
Just a couple of months ago, when the Dow fell over 300 points in one day, I went onto the MarketWatch website and found a section highlighting the most popular stories.
1. “Warning: the Plunge in Stocks Is Just Beginning.” Well, stocks quickly recovered and claimed new highs.
2. “S&P 500 Suffers Largest Weekly Loss in 2 Years.” True, but we emphasize the longer term and continually stress that your plan should take into account setbacks in the market. Be very careful of allowing weekly volatility sidetrack a multiyear plan.
3. “Three Market Warning Signs that Predict a 20% Tumble.” See my comment on article number one, above.
The top three stories were playing on the fears of investors. Simply put, bad news sells. But it can be confusing if the noise isn’t filtered.
It’s been over 570 days since we’ve had a 10% drop in the S&P 500 Index, or a decline that would officially be called a “correction.” Going back to mid-1940s, the median time period between corrections has been 121 trading days, and the average has been 273 trading days.
Markets never move up in a straight line and we are due for a 10% pullback, which, coupled with the expanding economy, would be healthy. No one can accurately predict when that might occur but it will happen. The portfolios we recommend have a long-term time horizon and are designed to help you achieve your personal financial goals.
Stay focused on your goals and make adjustments that take into account changes in your personal circumstances. Ignore fear-mongering that can be deafening during market volatility.