Excess Returns, Ep. 13: The Dangers of Headline Investing

The recent market sell off related to the Coronavirus has many investors worried. And with good reason.  When panics like this set in, we all tend to focus on worst case scenarios and want to take action in response. But the process of analyzing headlines and figuring out how they will impact the market is challenging for even the most sophisticated investors. In this week’s episode, we look at the dangers of investing based on headlines and why most investors are probably better off avoiding it. 

We discuss:

  • Why investing based on headlines requires not only the ability to predict future events, but also how the market will react to them.
  • Why successfully predicting a market event in advance can adversely affect future decision making
  • The importance of avoiding binary decisions during times of panic.

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