After the past three months, there is constant news of stock market movements and volatility. Unfortunately, much of this news is meant to sell headlines and does not provide meaningful information for investing decisions.
Recently, Dimensional published a short article called, “Here’s the Perscription“, taking a look at how unfettered access to information can often be harmful. The beginning of the article hits the nail on the head. If we are not feeling well, we can type our medical symptoms into WebMD and find out that we may either have a simple cold, or the same symptoms can be related to a deadly undiagnosed disease. Without context from a trained medical doctor, it is easy to overreact and jump to negative conclusions about your personal situation.
The same is true when it comes to the financial world. It is very easy to get wrapped in news headlines and stock market predictions. Without a framework and context of your unique goals and risk appetite, it is very easy to misinterpret the new story with how it actually affects your financial situation.
Bottom Line Context and personalized framework are extremely important when interpreting new information affecting both your physical health and financial health.