"If You Can Keep Your Head When All about You Are Losing Theirs …"Submitted by Bernhardt Wealth Management on January 7th, 2019
The title of this article comes from the opening line of the famous poem, “If” by Rudyard Kipling. In the poem, he lists several attributes that define a responsible, levelheaded adult. As we watch the media feeding frenzy currently taking place amid the see-sawing equities markets, the wisdom of Kipling’s words seems more apropos than ever.
The following headlines recently appeared on a widely watched online news site:
The Worst Is Yet to Come: Experts Say a Global Bear Market Is Just Getting Started: Updated on December 25 at 6:02 AM
Pretty Much Everybody on Wall Street Thinks the Market Will Rally in 2019: Updated on December 26 at 5:19 PM
As I mentioned on social media, it’s interesting to speculate on exactly what changed within a day and a half that caused "experts" to move from predicting a global meltdown to assuring us that "everyone" believes the market will rally.
Part of the explanation may lie in the facts that on December 24, the day before headline #1, the DJIA was down more than 500 points and had fallen by more than 400 points the previous session, while headline #2 appeared on a day when the same index was up more than 1,000 points. Of course, any serious student of the equity markets knows that one, or two, or even three days of trading do not a trend make. But the media are quick to trumpet whatever the market seems to be signaling on a given day, whether negative or positive.
Does anyone seriously wonder why the media bandwagon makes so many U-turns? The simple answer is that bombastic headlines—whether predicting doom or prosperity—garner clicks, page views, and “shares” on social media. These events, in turn, drive the prices that these organizations are able to charge advertisers. The motivation, in other words, is financial, but the finances mainly in view are advertising revenues, not your investments.
Perhaps one of the best New Year’s resolutions that serious investors could make would be to stop reading the financial press and spend time with your family or doing good. A good follow-up to that would be to establish a globally diversified portfolio of well-researched holdings that are matched to your specific goals, timeline, and risk tolerance. A third good resolution would be to commit to rebalancing your portfolio during periods of market turbulence like the one we are in now, and finally, you should consider discussing your portfolio, your needs, and your strategy with a fee-only financial planner who has a fiduciary commitment to your best interest.
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