I also don't think it's a good idea to pay too much attention to what the talking heads on the television screen are saying. Whether they're members of the media, hedge fund titans, or politicians, they all have an agenda. Media members are likely hoping to use eye-catching headlines and glib phrases to drive eyeballs to their platforms. Popular investors on Wall Street tend to like to talk up their books. And politicians are more likely to pander to their base than make productive statements that might help guide your investment decisions. I know that I'm being cynical here. All of this isn't meant to shortchange the importance of pertinent information. Knowledge is power, after all. It helps combat the irrational forces of fear and greed. However, paralysis by analysis is real. Information overload can lead to irrational choices. It's important to find trustworthy news sources that rely on facts rather than sensationalism. Furthermore, it's important to find a trusted fiduciary who is well versed with your financial situation and goals. Their advice will likely be more beneficial than anything you see in the headlines. The Factors That Matter When the market is in turmoil, it's best to focus on long-term goals rather than short-term fluctuations. Keep your eye on the fundamentals. Investors can take a step back and see that their equity portfolios have posted substantial returns over the last couple of years. They can focus on factors such as their dividend income stream, which isn't likely affected by market volatility. By looking at these positive portfolio aspects through a broader lens, it's easy to see that a short-term correction likely hasn't destroyed long-term financial goals. And lastly, investors should be paying attention to equity valuations and their underlying fundamentals, rather than share price movements. If you're a long-term investor, stocks getting cheaper is a good thing. It allows for you to accumulate more shares at better values. So, with this in mind, it makes sense to start putting together a shopping list. Market corrections create opportunities to buy shares of stocks that you've liked for years, but always thought were too pricey. Instead of wallowing in fear, why not add a nice asset or two to your portfolio? At the end of the day, market volatility comes and goes, headwinds come and go, headlines come and go, but more often than not, high-quality companies stand the test of time. This is why the U.S. stock market has created so much wealth in its history. This is why I continue to be fully invested. |
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