With so much news to consider on a daily basis, it’s important to filter out which news stories might impact the direction of the stock market and your investment portfolio. Some news stories seem like they should adversely affect the markets but they don’t, while others are significant enough to warrant a review of your portfolio allocation and financial plan.
If a news story has you considering making changes to your portfolio, call your financial advisor first. He or she can act as a voice of reason to help determine whether making changes is necessary.
History Tells Us the Stock Market Can Handle Some Bad News
Consider some of these important and rather unfortunate news stories that occurred within the last 20 years or so:
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In 1990-1991, the U.S. became involved in the Gulf War.
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In 1998, the Russian Ruble currency went into a severe crisis, the “Asian” flu breakout created a scare, and Long-Term Capital Management imploded.
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In 2005, there was mounting tension with North Korea and Iran over nuclear weapons, and Hurricane Katrina devastated the Gulf Coast.
Hopefully, investors at that time had their financial advisor review their financial plan and investment portfolios before making any changes. If an investor made knee-jerk reactions in those years and sold all of their stocks, it could have negatively impacted their ability to reach their long-term goals.
News Stories That Could Affect Your Financial Plan and Investment Portfolio
Today, some investors are worried the ongoing debate in Congress over the debt ceiling and the government shut down. These stories have the potential to tempt investors to make changes to their portfolios and stray from their financial plan.
However, those are stories we see as being more “noise” than news. The stories we think are more relevant today and should prompt a review of your financial plan with your financial advisor include changes in the current interest rate environment, the new incoming Federal Reserve Chairman, and tax and healthcare law changes. These are the types of stories that may impact the market and portfolios moving forward, and ones that investors should consider when allocating their investment portfolios.
How to Position Your Investment Portfolio Today
A properly diversified portfolio should have components that allow it to capture gains in the stock market and also attempt to weather downturns should the unexpected occur. To have one of our Wealth Managers analyze your portfolio, please call us at 1-800-541-7774.
Leslie is a Client Service Specialist at WrapManager, Inc.
