How to “Tune out the Noise.” For investors, it can be easy to feel overwhelmed by the relentless stream of news about markets. Let’s take a look at a few negative events over the past 18 years that may have led investors to question their approach.
- 2000: In Less Than a Month, Nearly a Trillion Dollars of Stock Value Evaporates
- 2002: Nasdaq Hits a Bear-Market Low of 1,114
- 2008: Lehman Files for Bankruptcy, Merrill Is Sold
- 2010: US Poverty Rate Hits 15-Year High
- 2013: US Government Shutdown
- 2016: Brexit and the Election of President Trump
- 2018: Trade War
Yet, as we can see, those who stayed invested likely experienced positive returns over that time period. While (some of) these events are now behind us, the market has proved resilient.
For many, feelings of elation or despair can accompany the news headlines. We should remember that markets can be volatile and recognize that, in the moment, sticking to an investment plan may seem difficult. Having a personalized investment plan that is aligned with your willingness and capacity to bear risk can help build confidence during periods of uncertainty. Focus on the big picture, such as time frames and appropriate savings, as well as a diversified allocation designed to invest in asset classes you believe will perform well over time (even if at different times). Read our Investment Philosophy.
When faced with short-term noise, it is easy to lose sight of the potential long-term benefits of staying invested. While no one has a crystal ball, adopting a long-term perspective may help change how you view market volatility.
1] Sources: https://www.dimensional.com/us-en/insights/tuning-out-the-noise
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