There's a right way—and a wrong way—to consume the news
If it's easy for you to picture a bad outcome, you're more likely to see that bad outcome as a risk. A spike in negative financial news may make it easier for you to imagine worst-case market scenarios. This makes investing—and the stock market—feel riskier.
Putting market and economic news in perspective can help you maintain a reasonable expectation of risk, which can help you stick to your long-term plan.
Here are 4 ways to get what you need (and nothing more) from the news.
There are 2 sides to every story—read them both
Most of us aren’t aware of our personal biases when we watch, read, or listen to the news. That’s okay. Just be wary of opinion pieces that make bold, definitive claims without offering an opposing argument.
Find balanced sources that provide differing perspectives.
If you picture the worst-case scenario, picture the best-case scenario too
The amount of time you spend thinking about a what-if scenario doesn’t increase the likelihood of that scenario actually happening. If you envision the market bottoming out, challenge yourself to spend as much time picturing the market rebounding. Don’t think about what information you consume. Think about how much information you consume.
Knowledge is power. However, reading, watching, or hearing negative market news can increase your anxiety and exaggerate your perception of market risk—the risk that your investments will lose value due to market fluctuations.
If you feel especially threatened by market risk, your heightened emotions may sway you to make a change to your portfolio that could jeopardize your long-term goals.
Determine how relevant the news is to you personally
We’re all dealing with the ramifications of COVID-19 together, but each of our experiences is unique.
Unfortunately, bad news—such as business closures and financial hardships—is a part of life (regardless of the health of the economy and the market).
It’s natural to feel upset when you read a story about a person’s or business’s struggle, but try not to read more into the story. Your circumstances are as unique as you are.
Tune out the noise
As consumers, we’re attracted to content with an interesting hook that elicits a strong emotional response, even fear. “Coronavirus Shock is Destroying Americans’ Retirement Dreams” is the name of a real news article published in March 2020.*
When you see a headline like this, recognize it for what it is: an attempt to get your attention. Because of the market downturn, it’s possible that some Americans won’t meet their retirement goal in the timeframe they planned. This doesn’t mean they won’t have the retirement they’ve been dreaming of; it means they experienced a setback, which is a known risk of investing.
In most cases, failure to meet a predetermined goal doesn’t translate to a lower future quality of life. Keep planning for the long term. When it comes to the market, what goes up comes down—and vice versa.
If you need help tuning out the noise, consider speaking with an advisor or sharing your feelings with a trusted friend or family member. Hearing someone else’s point of view may give you the context you need to develop a healthy perspective.
* Coronavirus Shock Is Destroying Americans’ Retirement Dreams. Ben Steverman. Bloomberg.com. March 26, 2020.
All investing is subject to risk, including the possible loss of the money you invest.