How to Ignore the Stock Market Noise

By Chad Smith via

If you’ve paid any attention to financial news recently, then you know October had the worst monthly stock market decline since 2011. You didn’t have to look far, as stock market noise was at a crescendo. Media headlines were filled with phrases like: epic turmoil, getting crushed and no place to hide. Emotionally charged words that make you feel like you need to do something to prevent losing more of your nest egg. But following our instincts when investing, can lead to dangerous outcomes. In times like this, we need a strategy to give us proper perspective.

On this episode, we’ll discuss why market fluctuations are incredibly normal and provide techniques to help you cope with short-term volatility and keep your focus on long-term goals instead. If you’re getting nervous about the direction the market is taking, you’ll want to listen for steps to confront the inevitable next occurrence.

How to Deal with the Emotional Roller Coaster of Investing

When listening to financial news, it’s important to remember that the media’s ultimate job is to sell advertisements. It’s not their job to help you see the long-term picture or help you reach your financial goals. Easier said than done when markets around the world experienced a 10-15% drop in October.

But if we back up, history provides a different perspective. Market volatility is reliably normal, but it can still make you feel nervous. To truly understand the ups and downs, take a look at the chart below from the Capital Group. There have been 12 full-blown bear markets since 1945. A 5% or more decline in the market typically occurs 3 times a year. And a 20% drop usually occurs about every 4 years. The past 10 years have actually been the anomaly.

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