It's Time to Shift Your Focus

Each week, through this commentary, we aim to bring you a brief summary of the most important financial-related news. Our primary goal is to educate you about factors that have the potential to affect your investments, and to help you cut through all the media clutter to find some clarity. Sometimes, finding that clarity can be especially challenging.

Last week, we were faced with a barrage of headlines from all over the world, and each piece of news seemed to have its own unique impact. In the end, investors struggled to make sense of all the news, and stocks ended a roller-coaster week in which all three indexes lost more than 2.5%.[1] 

Historically, the stock market has been sensitive to news. But amidst the uncertainty of recent years, its sensitivity has been heightened to an unprecedented scale. Headlines that would have barely made the evening news 10 years ago can easily lead a rally or retreat in a matter of minutes or hours in today's environment. 

Case in point from last week: Fitch put seven European countries on credit watch negative, and the markets retreated. Fitch affirmed the ratings of France, Belgium, Spain, Slovenia, Italy, Ireland, and Cyprus, and the markets rallied.[2] Data came out showing holiday sales slowing, and the markets retreated.[3] Headlines came out showing that holiday shopping boosts confidence in the recovery, and the markets rallied.[4] We could repeat this scenario with housing data, gold prices, oil prices, and nearly any other shred of financial-related news.

What is our point? Don't buy into the hype! Is it important to monitor world events for signals about how investments could perform? Yes. But is it healthy to dissect every smidge of news and then alter your investment strategy at each sign of strength or weakness? No. When signals are mixed and finding clarity is difficult, it is especially important to stick to your long-term investment strategy. Letting short-term, erratic moves dictate your investment decisions can easily lead to unnecessary losses.

It can be a jungle out there - there's no doubt about it. But just as you would trust an experienced jungle guide to lead you to safety, please trust us to guide you through these uncertain times. Use the weeks ahead to enjoy some quiet time with your family and friends, and tune out the noise for a little while. We urge you not to let the media steal your focus from the things that matter most.

[1] http://money.cnn.com/2011/12/19/markets/premarkets/index.htm?iid=Lead  

[2] http://money.cnn.com/2011/12/16/markets/europe_downgrade/index.htm?iid=EL

[3] http://money.cnn.com/2011/12/13/news/economy/retail_sales/

[4] http://abcnews.go.com/Business/holiday-shopping-boost-economy/story?id=15184370#.Tu8liexvBkQ

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.