{1:50 minutes to read} While the Presidential election is very important to the United States, its impact on one’s long term planning is zero.
The election is very contentious. People have their personal preference over the candidates. Many people despise Donald Trump, and many people despise Hillary Clinton.
{Read in 1:30 minutes} While informative and knowledgeable, the financial press is backward-looking rather than forward-looking, which means it has no predictive value for the future.
Journalists do a great job of describing what has already happened, but that’s known information, and as they say, hindsight is 20/20. Journalists can’t describe what will happen; it’s not their job to prognosticate the future. They make opinions about trends, but those opinions are not meaningful when it comes to managing portfolios.
{Read in 1:50 minutes} The federal government—”the Fed”—is interesting. It’s fun to talk about, much like a sporting event or celebrity gossip or the latest health scare. And it is just as much the subject of daily headlines as those news items.
Financial journalists love to report the Fed’s every financial movement, trying to make it relevant to investment. Some advisors play along, pretending they can predict markets based on the Fed, in hopes of attracting investors and motivating them to keep making transactions. Some say that the interest rates move and the Fed follows.
{1:22 minutes to read} All stocks have to be owned by someone. Investors essentially have long-term ownership in the world’s businesses. Like any owners, they get paid last. But often, especially if they globally diversify their portfolio, they also get paid most. And, like any owners, they are often the first ones affected by revenue changes, which can be scary. Managing human emotions are the major driving force behind investor success.