Investment noise: The enemy of financial success
The media focus on market fluctuations is a growing obsession. There are 34 business and finance programs and publications across Australian newspapers, radio and television broadcasts, with updates available 24 hours a day, as well as countless blogs and social media news feeds. A Google search for ‘investment news Australia’ delivers about 292,000,000 results in all of 0.39 seconds. But does all this analysis make us more informed or help us make better decisions?
What's the problem with commentary?
To answer this question, we first need to consider whether the aims of the news media or financial commentators are aligned with the needs of investors. Is their primary aim to offer insight, clarity and long-term strategic advice?
Sadly, a long-term investment gradually appreciating and delivering sustained tax effective returns isn’t newsworthy. Volatility, fear and short-term market fluctuations that raise the emotional temperature are more effective in boosting readership and ratings. The problem is this commentary can be the enemy of individual financial success as it stops people from taking action.
Then there’s the commentators themselves. Many high profile business and finance commentators have built their media profiles on providing controversial analysis at one end of the bull or bear spectrum; Have a balanced view and the networks may not invite you back. Many also have their own investment funds or publications and have their own agendas to advance. It’s also important to remember that much of the market news we digest is backward-looking and things always look different in the rear view mirror.
"Technology has ushered in a ‘news addiction age’ prompting people to crave regular updates at the expense of quiet contemplation." - Alain de Botton (Philosopher and author)
The take away?
What lies ahead is where investors need to focus to succeed. My advice is don’t be distracted by economic news and forecasts, and debates on what market we’re in. While financial background is important, by the time it becomes public knowledge it has generally been reflected in the value of the investments. Most of the financial news could be irrelevant to you and your long-term financial plan which is all about your individual needs. We can all take charge of our financial future, when we recognise it for what it is – just noise.
General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.