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This One Mistake Can Kill Your Portfolio


The world has never been a peaceful utopia. There have always been wars and terrible people doing horrible things to each other. Over the long term, however, the market largely ignores these things.


When I talk on the phone with certain members of my family, they always start the conversation 1 of 2 ways (depending on their political leaning).

“Did you hear the idiotic thing Obama said?”

Or, “Did you hear the idiotic thing they said about Obama?”

My answer is always no. For the most part, I don’t pay attention to what the president says or what other people are saying about him. It has virtually no impact on my life or my work.

In fact, it’s been years since I watched the nightly news. And the only reason I did then was a friend of mine was the local sports anchor. All the tragedy and murder they cover has no direct effect on my day-to-day. And if, God forbid, it ever did, my local news team is the last place I’m going for information on the situation.

The other night as I was driving home, I listened to a news program on the radio. They were discussing the latest horrors the Islamic State group brought down on innocent civilians. I truly hope that armies of the Arab countries kill every last one of those bastards. But just as I’m getting worked up about it now, I did then and turned the radio to music.

I could be accused of sticking my head in the sand like an ostrich, but avoiding much of the sensationalist news keeps my head clear when it comes to the markets.

It is so easy to get scared out of investments, either because of problems in the markets or the world.

But it’s important to remember that the world has never been a peaceful utopia. There have always been wars and terrible people doing horrible things to each other. Over the long term, however, the market largely ignores these things.

Consider this: In the 10 years ending Dec. 31, 1944, which was before the US was victorious in World War II and includes several years of the Great Depression, the market was up 40%. That’s not a big number over 10 years, but we’re talking about the Great Depression and World War II, for Pete’s sake!

I can’t imagine the nightly news in any of those years being any better than it is today.

Or how about the news in the 10 years preceding Dec. 31, 1968? The assassination of one of our most beloved presidents... the assassination of his brother, who was on the road to becoming president... a war in Vietnam that was going badly, and driving protests like we’d never seen before...

Yet the market was up 88% during those 10 years.

And if on January 1, 1970, someone said that in the next 10 years a president would resign due to a scandal... we’d lose a war... inflation would hit double digits... you’d have to wait hours to fill your gas tank... and an unpopular president would be in the White House at the end of it all... would you have predicted the markets actually rising during that period? Probably not.

Yet you’d have missed out on 60% gains.

It’s easy to get caught up in all the drama in the world. But your portfolio doesn’t have to. Don’t make investing decisions based on politics, global events or even war.

Money management giant Fidelity studied its customers’ accounts, and the ones that performed the best were the accounts the owners forgot they owned.

Just this weekend, a friend of mine told me that he bought $10,000 worth of stock in a large pharmaceuticals company 15 years ago. He then forgot he owned it. Several months ago, when he was looking for some money to pay for a large expense, he remembered the stock. It had grown to about $80,000.

I’m not suggesting you whack yourself in the head with a hammer, hoping for a case of amnesia in order to improve your returns. But ignoring the news and leaving your quality investments alone for years will get you where you want to go.

Marc Lichtenfeld is chief income strategist at The Oxford Club.

This article originally appeared at Republished with permission.

The information contained in this article should not be construed as investment advice or as a solicitation to buy or sell any stock. Nothing published by Physician’s Money Digest should be considered personalized investment advice. Physician’s Money Digest, its writers and editors, and Intellisphere LLC and its employees are not responsible for errors and/or omissions.

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