To say the least, 2020 has been a challenging year for most of us. First, there’s the heightened uncertainty (to put it mildly) about our daily lives, our health. Then, while many of us were staying home, and trying to keep track of what we needed to know about our communities during this pandemic, you may not have been able to avoid the endless BREAKING NEWS cycle designed to feel fear and keep us reading listening and clicking.  I have talked about our relationship with the media before.

The news we hear is generally negative scary and repetitive – especially over the last few months.  It is easier than we like to admit to find ourselves still reading linked articles and reports 15 mins or an hour later when we started out looking for a recipe for dinner or the weather forecast.  When we keep clicking, this has come to be known as ‘doom scrolling’.

This can be harmful to your financial and emotional well-being alike. How so? Whether you know it or not, your deep-down brain reacts to certain cues, like the color red in a headline (“Made you look!”) or the impact of a repeated falsehood, presented as fact.  This latter issue is called illusory truths. Basically, this is when a falsehood becomes more believable simply because you’ve heard it more than once.

Unfortunately, these misleading cues can lead you astray. Before you know it, you’re wondering whether you should move to the wilderness and live with the deer, or ditch your carefully structured, broadly diversified portfolio to chase after the latest, supposedly greatest news. For example, in this 2018 post, I covered five reasons to avoid the then-hot cannabis stock craze; these same reasons apply just as well to the media’s latest darlings such as recent stock market darlings, bitcoins, hedge funds or gold.

Long term academic research supports investment success coming from keeping your rational resolve across all the crazy news cycles. It starts with having a disciplined financial and investment plan in place. This is a document you can pick up when you are feeling worried and remind yourself WHY you are doing what you are doing with your investments.  You can remind yourself that volatility is a fact of life when you are investing for the long run.

 

How To Be Selective About Your Sources

Not every member of the financial press is bad news. For example, consider that study about the color red, described above. I first came across it in a personal finance column by The Wall Street Journal’s Jason Zweig.

The trick is to recognize the dramatic difference between all the nonsense out there versus the reputable financial journalists like Zweig or, here in Canada, Rob Carrick of The Globe and Mail. And let’s not forget the many informational resources we provide here at PWL.

 

Questions to Ask as You Digest the News

  1. Is this news playing on my emotions? Does the spokesperson seem excited or worked up themselves? Are they insisting on urgent, crisis-mode action?
  2. Is the coverage cursory or deep? Is it delivered as a never-ending spew? Or do they post periodically, thoughtfully, when they have something worth saying?
  3. Does the journalist cite rigorous, peer-reviewed, evidenced-based data? Or are they focused on grabbing a few soundbites from a fast-talking head?
  4. Is the journalist’s personal mission based on advancing your financial wellbeing? Does it say so in their bio? Or are they more about becoming famous by generating junky click-bait?

By running financial headlines through these questions, you can narrow down your sources to the one’s worth considering. It’s not usually the breaking news that counts; it’s the enduring insights you need to hear to achieve your personal financial goals – on time, and as planned. I’d like to think our own informational resources are contributing to that cause!