Investing

Look Past the Headlines for Stock Returns

By October 31, 2018 No Comments

If you are interested in knowing how the stock markets are doing, you have to look past the headlines.

I don’t know how many times I’ve gotten an alert on my phone and saw a headline that said “Dow Plunges!” or “NASDAQ Tumbles!”, and I’ve gone and looked to see what happened and those markets were down like 1% or 0.9%. That’s not really a tumble.

If you went to the grocery store and your favorite tuna went from $2 to $1.98 and the guy there says, “Oh look at that – the price just plunged!” you wouldn’t really believe that and you’d be right.

The other thing is that those headline numbers of the stock market probably don’t correlate to your portfolio (they shouldn’t, anyway) because they always talk about the Dow and occasionally they talk about the NASDAQ. The Dow is only made up of 30 large U.S. stocks. The NASDAQ is more stocks but it’s mostly tech stocks. There are no bonds, and again, it’s also all U.S. stocks. The best correlation with your U.S. stocks is probably the S&P 500 or the Wilshire 5000, but they never comment on them because nobody knows where they are.

The main point is don’t panic when you see those headlines. Realize that how you are personally positioned is probably different and possibly very different from what those headlines say, and again, there’s no reason to panic.

Michael Garry

Author Michael Garry

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