When breaking news impacts the market
Over the last several months, we’ve seen big news items circulate that have driven the market up and down. Whether it’s good or bad headlines — this news-centric market cycle has certainly put investors on a rollercoaster ride.
Most recently, Facebook has been in the news after reports surfaced that a third party allegedly sold data from 50 million users. The negative reaction led to a drop in Facebook shares of nearly 7 percent on Monday, March 19. This created a domino effect as other tech giants weathered declines, bringing down the overall market. This isn’t the first bout of news-driven volatility we’ve seen this year, and I doubt it’s the last.
This volatility should be seen as normal as we head into the ninth year of this bull market. Many people are concerned about what’s to come from the economy despite strong earnings, attractive debt structure and fundamentals. However, investors have begun to worry that the market is overpriced, so any blip on the news radar can send the market into disarray.
While big company news can be concerning, investors need to have a strategic, disciplined approach to investing. It’s important to avoid emotional reactions to daily headlines, and instead stick to a predetermined investment plan for the long-term.