Ignore The Noise: Filter Out the Dirty Water

The financial markets can be a turbulent sea, constantly buffeted by waves of news, rumors, and unpredictable events. This "noise" (aka, dirty water) – the daily fluctuations, the frenzied trading, the constant barrage of information – can easily distract investors from the core principles of a sound investment strategy. As you are aware, we firmly believe that when you ignore the noise and dirty water and focus on fundamental principles of diversification and due diligence in developing investment strategies, you can better navigate the market's volatility and potentially increase the probability of attaining your long-term financial goals.

One of the most significant distractions is the constant flow of market news. 24/7 financial news channels, social media feeds, and countless online sources bombard investors with information, often sensationalized and designed to capture attention. Case in point, if you look at all the news as it relates to the actions of the incoming administration, you would likely be overwhelmed by the doom and gloom from many of the headlines and the supposed impacts on the economy. This is what we mean by avoiding “Dirty Water.”  This constant stream of information can create an emotional roller coaster, leading to impulsive decisions based on fear and greed. This fear and greed can often lead investors to act in ways that run counter to the wise words of Warren Buffett, who states that “one should be greedy when others are fearful and fearful when others are greedy.”  By dismissing Mr. Buffett’s logic, investors may be tempted to panic sell during market downturns or chase fleeting trends (otherwise known as the “Fear of missing out – FOMO”), often to their detriment.

By tuning out the noise and focusing on the initial plan that you previously developed with your trusted advisor, you are more likely to maintain a disciplined and rational approach. This involves:

• Understanding your risk tolerance and investment goals: A clear understanding of your financial objectives, time horizon, and risk tolerance is crucial. These are areas that were originally discussed when developing your initial plan and should help serve as a blueprint to follow…especially during times of turbulence in the markets.
• Diversification: Diversification is a cornerstone of sound investment strategy. By spreading investments across different asset classes (stocks, bonds, real estate), sectors, and geographies, investors can reduce overall portfolio risk. When one asset class underperforms, others may provide a buffer, smoothing out overall returns.
• Long-term perspective: Market fluctuations are inevitable. Focusing on long-term goals rather than short-term market movements can help investors weather market downturns and stay the course.

Furthermore, our Investment Committee focuses on performing thorough analysis and adhering to our 5-step due diligence process to help filter out the noise and dirty water to focus on the key fundamentals that are impacting the economy and the market sectors. For example:

• Fundamental analysis: Evaluating the financial health and prospects of individual companies and sectors.
• Economic analysis: Understanding the broader economic environment and its potential impact on markets.
• Staying informed about market trends: Our team is continually monitoring the pertinent news and analyzing how it could potentially impact our multiple strategies. One of our many key disciplines is that we remain informed about long-term market trends and economic developments.

As we have stated many times in the past, we encourage you to avoid the noise in the markets and focus more on your happiness outside of the financial world. Our team is behind the scenes, focusing on the fundamentals of diversification and developing sound investment strategies that are crucial for long-term investment success and your Financial Peace of Mind. By adhering to the comprehensive plan that you originally developed with your advisor, you may increase the probability of obtaining the future financial security that you expect in retirement. While short-term market fluctuations may be unsettling, adhering to a well-defined investment plan developed with your advisor based on sound principles can provide the stability and confidence needed to weather any storm.