Here is a timely post by BAM Alliance Director of Research, Larry Swedroe.
In this piece, Larry discusses how many individual investors are influenced by headlines in the news. While many news stories are noteworthy and important, they should not be drivers of investment choices.
Information travels at the speed of light and stock prices reflect this information at the same rate. Individual investors are not able to capitalize on the news to find underpriced stocks or gain other advantages unless they have insider, or, illegal information.
A prudent investor will have a portfolio of low cost, globally diversified, passively managed mutual funds that render market returns. This is know as Evidenced Based Investing. Once an appropriate degree of risk is determined these funds can be combined with a fixed income portfolio of bonds, or bond funds (safety net), to satisfy that investor’s long term investment objectives.
For more on bonds, see my prior blog posts, “What’s a Fixed Income Investor To Do.”