The News and Your Investments

SERVING HOUSTONIANS AND SURROUNDING AREAS SINCE 2002

– Stock price volatility does not equal risk

– Short-term trading equals risk

– Potential reward exists during market volatility when stock prices drop

Most reputable publications from local newspapers to national periodicals tell us that individual investors should avoid short term, speculative trading and focus on long-term investing.  However, to completely report on all aspects of the market, publications are obligated to also report on short-term events, ranging from political to economic issues.   Otherwise smart investors get into trouble by focusing more on the short-term news cycles than on their own long-term investment needs.  News coverage focusing solely on volatile stock prices can cause panic and selling because investors fail to realize the risk is in their selling not in the volatile prices.  Volatile prices cause investors to lose sight of company and economic fundamentals, which in the long run are the drivers of the market, not the day to price fluctuations.  In fact, potential reward is more likely to be gained when investors buy in these falling volatile markets and fundamentals are solid.

For more commentary look to our pages: The Great Recession of 2007-2009 and Current Market Commentary.

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