News & Portfolios: Unplugged & On Auto-Pilot For Passive Investors
Updated: Sep 17, 2021
There are so many distractions lately. Covid this and that is ongoing and relentless, global warming, politics, country elections, Crypto, Gamestop, reddit movements, global relations, protests, trials, wars, world atrocities, conspiracy theories, terrorist fears, increasing inflation, etc. etc. The media doesn’t help the situation one iota. In fact, news isn’t really news any more, and I likely don’t need to name major news networks as examples. You can guess which ones? These news stations are examples of everything wrong with the mainstream media these days, and why the world really needs to move more towards a more free-thinking populous. The news takes every little bit of information they can, and morphs it into mind-controlling editorial meant to sway you to one side of a story or the other, or, to reinforce an opinion you already strongly hold. Watch FOX for one hour then switch to CNN for an hour. You will see they are the polar opposites of each other, far right and far left, with little-to-no middle ground. They take their versions of facts, and manufacture very different truths to support their own left/right narratives and targeted demographics. Really, if you ask yourself why you lean towards any news outlet more than the other, you are likely revealing your own positions on the news. If you can see all these media outlets for what they are, money-making TV shows meant to capture audiences purely to improve their ratings, they eventually reveal themselves to you. That is, if they don’t drive you insane first? An interesting fact, if you google the most trusted news stations in the USA, guess what comes up as number one? BBC News (the British Broadcasting Corp)!!!! The majority of Americans don't even trust their own news outlets.
If it’s not twisted truthes and sensationalism, then it’s staged journalism. The kind where questions are pre-submitted, answers from politicians are edited and there are canned responses on a tele-prompter, and the attending media signs agreements to stay on point so no “tough” or “surprise” questions are asked. That’s what I feel we have here in Canada. The Prime Minister never gets grilled or has any tough questions he doesn’t expect. If someone slips one in he slips and slides around it and moves on.
The stock market news stations are not much different. Every pundit with a theory or strategy is given the stage. Almost all of them are wealth advisors or brokerage managers with biases towards the services or products they sell. Passive investing is never talked about and index, low fee fund providers like Vanguard are never given the stage. The closest they come is in the periodic Questrade commercials. There is no money in passive investing or your knowledge of it for these pundits. They will talk about their stock and mutual fund picks including their predictions, valuations, what the latest trends are, what are the best investment vehicles (theirs’ of course), what materials (gold, silver, copper) are doing, etc etc. They install complexity (fear) into their conversations so the average person feels they cannot do this themselves. They all have slightly different opinions and slightly different areas of expertise. And when some market phenomena happens like Bitcoin or Gamestop, the market news will become inundated with antagonists and protagonists. In the end does any of it matter? The reality in all of these situations is there is HUGE RISK, and there are equally BIG WINNERS and BIG LOSERS. Which side you are on just depends on your luck, your initial position, and your discipline to walk away a winner (or neutral) versus a loser. I will watch market channels, but I watch mostly to look for sector trends that are most likely to repeat themselves in future downswings. That way I can be in the right frame of mind and be opportunistic on market downswings.I watch so I can see if market is on a downswing (buying opportunity) so I can average into my position lower if possible. Human behaviour is pretty predictable from the stock markets’ perspective. Fear, greed, the herd mentality follow a natural trend in the markets, especially with active or new investors.
Anyone who is a DIY passive investor watches (should watch) these market anomolies with equally passive interest, because investments like Crypto and Gamestop don’t even come close to qualifying yet for the 100’s of quality investments held in a reliable, index-tracking ETF. And if they do eventually stabilize, and start delivering value with predictability, then I’m sure they’ll get added to various index funds in proportions that fit the fund risk profiles. These anomolies of the stock market have zero impact today on an indexed, diversified, passive portfolio, other than their impact on the market trust, or rather lack of trust. But this is a constant ebb and flow, and the quality investments in the indices are around to stay and pay. If they stop performing, they either get reduced as a holding or punted out of the fund and another comes in, but this is very rare. They are generally predictable and reliable, even in a crash. These companies have no choice but to morph with world changes and keep on trucking. Markets go up and they go down, but inherently they climb more than they fall. The news is the news, and passive investors don't follow the herd. Passive, index investors are quite happy tracking the whole market, avoiding excessive risk and volatility, and letting the indices do their magic over time. Passive investors will slowly and consistently average into their ETFs over long periods of time to maintain an average share price, and periodically buy in with free cash, if on hand and when there are buying opportunities (market downswings), to drive their average costs even lower. It’s a time-tested strategy that has been working for decades. The news can get you down or distract you from your game, if you let it.
Unplug yourself and put your portfolio on autopilot!