Investor Points of Few – Breaking the Headline Habit

Have you got a “Headline Habit?” Do you follow the news like it’s investment advice? There are a lot of folks out there who do. I know…

By Alan Steel

Have you got a “Headline Habit?” Do you follow the news like it’s investment advice? There are a lot of folks out there who do. I know.

They come to me as new clients wondering why their “strategy” isn’t working.

So pardon me this moment in what you may at first assume is some sort of psycho-babble (though it’s not. It’s actually from author and director of the Therapeutic Neuroscience Laboratory at the University of Massachusetts Medical School, Judson Brewer).

Bad habits – like following headlines – are addictions by any other name – patterns you’ve adopted when you feel stressed, anxious, sad…whatever.

The point is; you’re not feeling good, and you want to. So you do something that has made you feel good in the past, like following the herd to presumed safety.

That compulsion actually comes from deep inside your skull via what’s called your Lizard Brain at the centre of your heads.

It’s an evolutionary mechanism that once saved us from becoming a hot lunch when fires in caves was considered to be the latest innovation in central heating.

But following headlines, like following the herd, almost always ends in the same place; mediocrity, or worse – buying things at a higher price than you should have, and then selling them in a panic at a lower price than they’re worth (or soon will be when that short-term panic has run its course).

It’s the same difference to your brain.

But not your wallet.

There’s a reason most investors reap less than a third of the value of the stock market through investing. 

And all those index-linked trackers that you buy into to follow the market’s movements upwards, and then panic sell while they fall back down again, is like paying for a roller-coaster ride to bring you back to where you first started.

That’s the headline ride you’re lining up for.

So why not try and drop the habit.

It’s easier than you think. 

Take some time to find an adviser who has decades of successful investment experience and who can explain the often complicated inner workings of investing in one and two syllable words.

That’s when you know you’re on the right path.

Then listen to what you’re being told, and ignore the headlines.

Because the only way to kill bad habits is through mindfulness.

And after all, this is your money we’re talking about here.

Alan Steel, Chairman, Alan Steel Asset Management

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