News Headlines: An Investor’s Worst Enemy.

If it bleeds, it leads. This common saying in journalism refers to the notion that the more horrific or negative a story is, the more prominent it is displayed on the front page. This is certainly true of financial news headlines. Most of what you read on a financial websites and in a newspapers is just noise. Investors should never make investment decisions based on what they see in a headline. Rather than help you make good financial decisions, the media is more likely to scare you until you can’t sleep at night or cause you to sell all of your stocks at the first sign of a correction.

It is very likely the stock market is going to have a correction at some point this year and we may already be in one. The S&P 500 is off approximately 3.5% from its recent high. You can bet if that number reaches 6% or 7%, the media is going to begin writing stories about the death of this bull market and a possible recession ahead. Not very many reporters are going to write stories about how corrections are a normal and healthy part of bull markets and that we were overdue for one. Read more »

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