Perhaps you take your morning cup of coffee while watching Squawk Box on CNBC. You enjoy listening to morning anchors drone on about their predictions for the market’s movements that day before the opening bell rings. Especially if you work in finance, you likely have Bloomberg, Fox Business, and CNBC on all day, watching the DOW tick up and down while anchors interview company CEOs and discuss the latest business news and hot stocks. But here’s the rub: are you actually learning from these shows and watching the ticker, or is it merely producing anxiety? Is watching financial news shows a good time investment?
Volatility = Headlines
Today’s market is a volatile one, and that volatility makes for news-worthy headlines. Reports of the Dow plummeting 780 points, 2.6%, on a single day in August provides plenty of speculative fodder for talking heads on financial shows. Television talking heads then attempt to analyze why the market moved overall up or down that day or why one stock or another is trending. Any new IPO offerings are always met with excitement as anchors anxiously speculate who will be a winner or loser. Stock prices can even rise and fall based on the tweets and drama of their CEOs, and sometimes even Presidential tweets. This heady mix of drama and anticipation leads to a 24/7 financial news cycle and frequent fluctuations of the market.
Growing Financial Anxiety
Despite the economy’s overall strength, a July 2019 Gallop Poll noted a sharp rise in American’s financial anxiety. Over 40% of Americans are going into debt or barely making ends meet. And 54% of Americans worry they lack enough money for retirement. The scars of the 2008 recession still loom large for many, especially those still working who lost their retirement savings in the crash and had planned to retire a decade ago. A 2018 poll by Northwestern Mutual found that money was the number one stressor for Americans. The student loan crisis has topped $1.5 trillion in debt millions of Americans are struggling to repay.
If gnawing financial anxiety keeps you up at night or you have heart palpitations and sweaty palms when watching Squawk Box, maybe it’s not your coffee. Maybe you should find a healthy way to cope with your financial stress and learn to engage with financial news in a healthy way that keeps your blood pressure low.
This is Your Brain on 24/7 News
Subjecting yourself to a constant barrage of new information can cause anxiety in the first place, whether it is watching the news all day, learning a new skill in school, or picking up a new sport. Your brain is being challenged and trying to categorize all the new information you are learning and sometimes interrupts your sleep while it is converting this new information to long term memory storage. If you keep the stream of new information coming, you will never catch up, leading to feelings that you may be missing some crucial piece of information, concern that something might change for the worse tomorrow, or that you will never fully comprehend what is happening in the market and you should just give up on investing.
Should You Tune In or Out?
But should you care about the fluctuations in the market? Experts advise that you shouldn’t take fluctuations to heart and suggest that you tune out to dissuade growing financial anxiety. Reacting to short term price movements won’t benefit you over time. Instead of calling your broker to buy or sell every time a stock you own drops or grows a percentage point in a day, you won’t end up ahead financially. And in fact, you may end up losing out on rebounding gains if you sell after a poor short-term showing and the stock has a right about-face and grows past its losses the following week. You also will end up paying more fees for trades than if you hadn’t made those trades at all.
Keeping on a steady course is the key to long term investing gains. Falling prey to market volatility fears and anxiety can end up tanking your portfolio. It’s a cliche but it’s true: slow and steady wins the race. So if you find that your anxiety peaks when watching financial news shows and you cannot shake the feeling that you need to jump out of the market, take some deep breaths, and call your financial advisor. They can help you to decide on the right course of action for you and you can rely on their expert guidance and opinion. Leave the all-day financial news shows and ticking DOW index to the financial professionals, and go on and enjoy living your life with a little less financial anxiety.
