Dangers of Headline Investing

10/09/2018 10:04:34 AM // Written by Phil Stockton

Dangers of Headline Investing

“Recession Time Bomb Ticking Faster”. That was the dramatic headline in an article published by Dow Jones’ ‘MarketWatch’ news service three years ago. Since then, global equity markets have delivered an annualised return of more than 10%.

Investing with one eye on the news headlines can be a hazardous occupation. We risk acting on news that’s already priced in, or making long-term investment decisions based on one individual’s opinion. Is there a better way?

Here are three pieces offering an alternative view:

  • Donald Trump impeachment talk, Brexit uncertainty, the North Korea nuclear crisis, interest rate fears, trade tensions – it seems there’s always something for markets to fret about. Why have share markets kept rising with all this news happening? Ben Carlson says the answer is that expectations matter more than the news itself…


  • You don’t have to look far to find gloomy market headlines. Of course, another big market fall will occur at some point. But those who act on dire forecasts can surrender big gains in the meantime. This article looks at some of the grim forecasts of the last three years and wonders why so many turn out to be wrong.


  • Generating gains for your portfolio based on news is tricky. That’s because you don’t just have to correctly predict the outcome of a major event (like who is going to win an election), but you must guess how the market will react. That’s a tricky proposition, and as this writer suggests, one we should ignore.

Having a plan and sticking to it is one of the best ways to improve investment outcomes. If you don't have a plan then you need one. If you do have a plan, do you stick to it? 


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