How the news can negatively affect your portfolio

Do you recall the last time you turned off the nightly news and told yourself, “I feel great about where the world is headed!”? It’s probably been a long time. You’ll be hard pressed to come away with one feel-good story because the fact of the matter is these stories don’t sell.

Don’t buy into the negativity

Take these top June 17, 2019, stories from a major news organization for instance:

Top News Stories

Not exactly inspiring a lot of confidence in the world, are they?

All this negativity can impact your portfolio because it weighs heavily on your emotions. To combat this, I started a list back in 2012 of all the negative, portfolio-destroying, headlines every year.

2012: The Fiscal Cliff

2013: Obama Government Shutdown

2014: Oil Crash

2015: China’s growth stalling

2016: Brexit & Trump’s election victory

2017: North Korea’s Missile Tests

2018: NAFTA & China Trade War

Each one of these headlines would make you want you to cash in your portfolio and stuff the money under your mattress. Heck, I feel the same way today with the daily bombardment of Trump-related headlines. Every time I turn on the news, there is a new red flashing headline talking about how the world is going to hell in a handbasket.

Avoid investing by “feel”

But at the end of the day, the most important aspect of investing is to take your emotions out of it. It doesn’t matter how I feel sitting in my office in Winnipeg; the stock market is going to do what the stock market is going to do. As of writing this, the Canadian stock market is up over 36%, and the US stock market is up 130% since January 1, 2012. If you had stuffed your money under your mattress when the Fiscal Cliff talks began in 2012, you would, without a doubt, have major back pain by now.

Keep your eyes on the (long-term) prize

When Trump was elected in 2016, the futures market fell so hard overnight that trading restraints were initiated. I remember watching the futures market go down and thinking to myself, “This time it’s different.” It was so obvious. All signs pointed to the stock markets crashing the next day. I made a point to get to the office earlier than usual as I was sure my phone would be ringing off the hook. Low and behold, markets actually went up that day and have continued to increase throughout his term as president. Boy, was I wrong!

I’m not going to argue that it won’t actually be different someday, but the fact of the matter is you shouldn’t care. If you’re investing, you should have a long time horizon. When you have an investment strategy in place (as outlined in my last video), the short-term fluctuations of the stock market shouldn’t matter. It’s like walking up a hill while playing with a yo-yo, you want to keep your eyes on your progress up the hill and not on the yo-yo going up and down.

When I rushed to the office the day after Trump was elected, it was not to sell all our clients’ investments and move to cash. It was moreso to remind our clients to keep their eyes on the prize – that we are investing for the long term and that the day-to-day fluctuations of the stock market won’t affect our long-term strategy. It was a conversation that was a lot easier to have with the stock markets rising that day ;).

Don’t worry, be happy

If you have a long-term investment strategy in place, turn off your TV and don’t cause yourself extra stress worrying about your retirement portfolio. Your portfolio is like a bar of soap, the more you play around with it, the smaller it gets. Stick to your long-term plan and enjoy life!

If you don’t have a plan in place – let’s talk!

 

Marc Sabourin is a Winnipeg based Financial Advisor and Retirement Specialist with Harbourfront Wealth Management. His focus is on helping pensioned employees achieve their retirement goals. He draws on his real-life experiences to explain strategies that are often presented as intricate. He believes financial literacy is an integral part of one’s financial well-being and his goal is to make learning about these topics fun and enjoyable.

Winnipeg Financial Advisor