Some Reminders About the Stock Market

Article by Ben Carlson

It’s been a volatile few months in markets with global shares falling 13% in the first two months of the year before bouncing up over the last few weeks. It can be difficult to see the market moving so dramatically but when it comes to investing this is a normal, expected part of the investor experience. Risk and return are irrevocably tied; you can't achieve long term growth without short term risk. 

It can help to get an understanding of how the share market works. This article by Ben Carlson looks at the last few months and provides six excellent reminders about the share market including:

• It moves fast
• It doesn’t care about the headlines
• It’s very hard to beat, and
• No one can predict what’s going to happen in the short-term

I especially like his point on how the share market doesn't care about the headlines. We expect that what we're currently seeing on the news will have a huge effect on the share market, and in some cases it does, but generally, the market moves on well before the headlines do. 

"By the time the news is in the headlines the stock market has already digested it, moved on and looking ahead for what’s next.

For better or worse, the stock market tries really hard to be forward-looking.

That can be confusing for investors that are trying to understand the market’s movements based on the news of the day."

It's also worth noting that news websites have to print something, they are always going to post something dramatic to try and grab your attention. That doesn't mean it's actually helpful information for you to have. 

Read the full article here: https://awealthofcommonsense.com/2022/03/some-reminders-about-the-stock-market/