Today's Headlines - Tomorrow's Fish and Chip Wrapper

Journalists define news as what’s novel, startling, eye-catching, unusual or conversation starting. The Media knows that bad news sells better than good news and uses this to grab eyeballs for their clients, the advertisers, to sell their products and services.

While news coverage also unquestionably plays a civic function, much of what is given prominence in the media day-to-day is consciously workshopped by editors to trigger an emotional reaction and build engagement.

For long-term investors, this presents a challenge. How do you differentiate between genuinely important, far-reaching and reliable information on the one hand, and cynically chosen clickbait and inconsequential beat-ups on the other? Put another way, how do you tell the difference between signal and noise?

One approach is to look at past headlines in an historical context and ask yourself how you would have fared if you had acted on those in your own portfolio.

The headlines below are a random sample from a Google search, starting from 2015. Notice how many of them use dramatic, emotively loaded adjectives and how many are purely speculative.

• "Chinese Stock Market Turbulence" - June 2015, BBC News

• "Brexit Vote Shocks Markets" - June 24, 2016, BBC News

• "Dow Plunges 1,175 Points in Largest Single-Day Drop" - February 5, 2018, The New York Times

• "Global Markets Plummet as Coronavirus Spreads" - March 9, 2020, BBC News

• "Oil Prices Turn Negative for the First Time in History" - April 20, 2020, CNBC

• "Reddit Traders Send GameStop Stock Soaring" - January 27, 2021, The Wall Street Journal

• "Chinese Property Giant Evergrande Faces Collapse" - September 20, 2021, Reuters

• "U.S. Inflation Hits 40-Year High" - June 10, 2022, Bloomberg

• "Markets Tumble as Russia Invades Ukraine" - February 24, 2022, Financial Times

• "Bitcoin and Other Cryptocurrencies Plunge" - May 12, 2022, The Guardian

• "Federal Reserve Raises Rates to Combat Inflation" - March 16, 2023, CNBC

• "SVB Becomes Largest Bank Failure Since 2008" - March 10, 2023, The Washington Post

• "Tech Stocks Surge on AI Advancements" - January 15, 2024, TechCrunch

• "Congress Reaches Last-Minute Deal to Avoid Default" - June 1, 2024, The New York Times

• "China's Growth Slows, Impacting Global Markets" - October 15, 2024, Bloomberg

• "Renewable Energy Stocks Hit Record Highs" - November 20, 2024, Reuters

• "Major Tech Companies Announce Mass Layoffs" - February 10, 2025, The Wall Street Journal

• "Global Markets Experience Sharp Swings Amid Uncertainty" - March 18, 2025, Financial Times

  
  

To be fair, many of those headlines accurately reflected concerns in some corners of the market at the time they were written. However, the MSCI World Index delivered an annualised positive return of 8.4% despite these headlines.

While market indexes show day-to-day transparency and volatility, long-term investors should consider periods of volatility as opportunities. After all, as Warren Buffet once said, volatility is an investor's friend. When markets are down, good businesses are selling cheap and present an opportunity to buy or rebalance.

But we need to put these events into a wider context:

1. Understand How Markets Work:

   Often by the time you read about an event, the markets have already moved on to something else.

   
   

2. Understand How Media Works:

   News coverage has become dominated by speculation and opinion, competing for your eyeballs rather than reporting the facts - and it has intensified in recent years. You have probably heard the phrase “never let the facts get in the way of a good story”.

   
   

3. Ponder on the Motivations of Journalists:

   Noise IS their currency. What’s important in their world is not so much what is happening, but that there is always something happening. Otherwise, they feel like the fire brigade without a fire to put out.

   
   

4. Accept What You Can and Can’t Control:

   News can be diverting and interesting, it’s true. And there’s nothing wrong with taking an active interest in world events. But as long-term investors, acting on news that is already priced into markets can be incredibly destructive to your wealth.

   
   

5. Focus on What You Can Control:

   Like how you have cash for your short-term and emergency needs while your longer-term investments are allocated across a range of shares, bonds, property, and cash, the degree of diversification in your portfolio, what you pay in costs and taxes, and the regular rebalancing of your portfolio.

   
   

6. Work with a Financial Planner:

   All of this is easier if you have a financial planner who can keep you disciplined and true to your original intentions. Because they know you, understand your risk appetite, and are aware of your goals, the story always starts with you and not with what’s in the headlines.

   
   

None of this is to downplay the tragedy of real events or to deny the magnitude of whatever is happening in the world, but taking a human interest in global affairs and looking after your own welfare need not be incompatible concepts.

One final word, you are not investing in “the market”. You are investing in businesses that are in the business of staying in business. They do so by providing products or services to you and me, and millions of others around the world need every day for a profit.

As an investor, you share in those profits and profitable businesses stay in business.