How to eliminate market noise from your life
|
I’m kidding. You can never eliminate market noise. Unless we put a huge box over our head and don’t step out of the house. In recent months, headline news from the Iran conflict keeps changing many times a day. And that’s a big reason why stocks have been bouncing up and down. Somewhere in the middle of all that, I found myself thinking about the most common piece of advice gurus and advisors love to give: “Just ignore the market noise". “Just ignore the market noise.” Yes, they are right. Telling people to ignore market noise is well-meaning advice. It’s like motivational speakers telling you to STAY POSITIVE. The problem is it’s incredibly hard to ignore market noise. When your stock portfolio goes into red, you get that uneasy churning in your stomach. I admit, I get that too. It’s our body’s fight or flight instinct kicking in. So doing nothing can feel unnatural and that’s why people panic sell. Today, it’s even worse when market noise follows us everywhere - social media posts, YouTube, news alerts from apps and so on. So I’m going to give you the greatest secret in today’s email… Market noise is never going away.And I’m ok with that. Sure, take the good advice from gurus and advisors to just “ignore the market noise.” But the better advice is this: Have perspective. Think about this. Dinosaurs have lived for over 165 million years on earth. Humans have only existed for around 300,000 years. And me? I’m turning 39 this year. My third boy is coming out soon. And if life goes well, I might still have another 40 to 50 more trips around the Sun. Now compare that timeline to today’s news. The Iranian war has just started not too long ago. Headline news keeps changing between good and bad news. And stocks are down into correction territory. It sounds scary. But just so you know, Warren Buffett had no idea his multi-billion dollar investment fund would have crashed over 30% a few times. The worst was during the 2007-2009 global financial crisis. As I’ve shared with Diligence Wealth Club members yesterday on my live portfolio updates… Come to think of it, I’m sure Warren Buffett must have felt like a punch in his guts at times too. Yet Berkshire Hathaway continues to thrive through market cycles - the inflation shock in the 1970s, Black Monday, the dot-com bubble, the global financial crisis and so on. Have perspective.Once we accept the market noise is never going away. Once we accept our stomach will still churn when the stock market gets bashed down, the next thing we need to do becomes much clearer: We focus on accumulating high-quality dividend stocks for our portfolios. This way, even with all the market noise, you’d still be paid dividends month after month… Simply put, whether oil prices keep rising, or guessing how long the war would last, solid businesses that are still the top dog in their own industries still have their durable competitive advantage, sustainable earnings power and a strong financial position. They command a good return on investments. And ultimately, reward shareholders with ever rising dividends and a higher share price. As far as market noise is concerned, what feels terrifying in that moment often looks much smaller in hindsight. Trust me, once we focus on buying a basket of solid, dividend growers, market noise becomes a distraction. Also, I love to share some of my favourite articles for March:
xoxo Sometimes, investing can be simple. Willie Keng, CFA Founder, dividendtitan.com P.S. Like this issue? Click HERE to join other dividend investors reading my DT Compound Letter. I send my regular letters to your inbox. |
Dividend Titan
Analysts love a bullish call. So when a Citi analyst put a sell call on OCBC two weeks ago, I went: “Finally someone started making sense.” Singapore banks haven’t fallen as much as I’d like. That tells me one thing: The market is treating DBS, OCBC and UOB like a riskless asset class. Even if people don’t say the word “riskless”, the market is buying Singapore banks as though it believes it’s riskless. There’s little margin of error for Singapore banks trading at market highs. Investors have...
The bond market is seeking answers. CoreWeave, a major data centre operator saw its shares hit a 52-week low. Its bonds, which were issued in June with a 9.625% yield, have dropped in price. This pushed its yield to around 15% recently. This means, any investors who are buying CoreWeave’s bonds are demanding a 15% return to compensate for its credit risk. I would say this is a canary in the coal mine for its debt-funded AI expansion. The company continues to burn enormous cash. And this data...
I hated what I was about to do. “Ah, darn it.” I took a deep breath before I hit send. It was 2016 and I was a research analyst in a private bank. The report I wrote on the computer screen was glaring back at me: "Sell call" on Nam Cheong. Nam Cheong was one of the market darlings during the oil & gas boom. It built and chartered oil support vessels for big energy companies back then. Nam Cheong bonds sat in many of the private clients' portfolios. It wasn’t a popular call. Within days, my...