Noise is all around us. Many times, we pay close attention and other times, we tend to tune it out.
Take summer vacation for example. It’s time for summer vacation and the cross-country family Road Trip!!!! The kids are in the car, the bags are packed, the dog is in the back seat chewing on his treat, and we’re off.
The Family Road Trip
Picture Day 1 – The hotel is great. We walk by the lake. The kids (and the dog) went swimming. Success.
Now, picture Day 2 – The kids are in the car. The dog seems to be content. Then what happens? Everyone starts getting bored. Within the confines of the close space, the fidgeting begins and so does the noise. In fact, the noise from the back of the car is so loud that it’s hard to think.
So, now you ask yourself: Is this going to be the sound we hear for the remainder of the trip? Is there anything important the kids are trying to tell us? How do I decipher the noise from the news and what do I tune out?
There’s noise and there’s noise. Some noise is important, i.e. emergency vehicles, etc. Other noise is important, like conversations. And, still other noise is noise for noise-sake (or whining sake) and soon becomes the “white” noise that we can simply tune out.
Similarly, the noise of the financial markets, needs to be understood so that you can put it in noise perspective.
- Listen and Look with a Mindful Eye
Listening to the media can give you the same reaction as a road trip. Headlines from news media like television, radio and newspapers, as well as social media and internet news all provide “advice” on what to buy, what to sell and where to find the next bargain.
Just like the kids, what is relevant?
As a rule, by the time you hear or see any “tips” in the media, the opportunity has passed and it has generally been priced into the market. Typically, the media uses these headlines to bring you into the rest of the story, but quite often there is nothing new to hear or see.
- Short-Term Noise
As you listen to this short-term noise, it may steer you away from the original road trip you had planned. If you have a long-term goal in mind, you need to focus on it. Stay focused on the trip down the road, not the immediate noise you’re hearing from the kids or the media.
If you are having a problem, seeing the “forest from the trees” so to speak, a trusted financial advisor can help. Your financial advisor can help separate emotion during uncertain periods and look at the potential long-term benefits of staying invested with a plan in place and seeing headlines as just that – headlines.
- A Look Back at History
There have been many events, like the slide of the Nasdaq in 2,000, that cause us to think emotionally. Currently the Nasdaq is around 7,700. While this type of growth may not always happen, time is on our side if we just follow our goals, keep a well-balanced portfolio and avoid the noise.
Next month, we will look at “Enjoying the Journey”.