Don’t let headlines hijack your portfolio
Why discipline, not forecasting, is the investor’s ultimate edge.
If I told you a war would break out between Israel and Iran, the US would join, and then, just two weeks later, stocks would be at all-time highs and oil would be down… would you believe me?
Likely not. And yet that’s exactly what just happened.
Just one more reminder that bull markets advance despite all the seemingly valid reasons not to invest.
HSBC: we’re not bullish enough!
The latest investment bank to change its mind is HSBC, who argues that investors are not bullish enough. (Read)
This comes just weeks after the bank cut its S&P 500 outlook for the year. (Read)
This is just one more sharp reversal from the analyst class that was bearish after the market tanked in April. But this is the game on Wall Street. Analysts are always playing catchup, adjusting forecasts to match price action.
But we don’t have that problem. If you followed our advice to dollar cost average into April’s correction, you’re now in a much stronger place than before the drawdown.
We as individuals have a structural edge over Wall Street: we don’t need to pretend to know what the market will do next.
The reality is good businesses thrive through cycles. Ignore the noise, stay the course, and let the compounding do its job.
Valuations matter… right?
Yes, valuations are elevated. They always are in bull markets.
Occasionally we see charts like Cisco get passed around as reminders that buying individual stocks at extremes can backfire.
But that’s why we use rules, like risk management and exit criteria, not vibes and fears.
The truth is, price-to-earnings ratios (P/E) are less predictive than many think. Markets can stay "expensive" for years, and trying to time exits based on valuation alone usually leads to severe underperformance.
Don't use valuations as a reason to sit out. Use a rules-based approach to guide your exposure.
The debt time bomb
Yes, US debt is at $33 trillion. It’s an issue. But it’s been an issue for a long time.
The government is not a household or a business. It can print money, manipulate interest rates, raise taxes, and service debt in ways no company or person can.
A debt crisis will eventually come. But betting your portfolio on when is a losing game. Markets don’t reward doomscrolling, they reward ownership.
Worrying about debt while stocks are making new highs is like refusing to board a plane because it might crash in 20 years.
“Recession is coming!”
The recession chatter has been constant for over two years. Yet the S&P 500 is at all-time highs. Forward earnings just hit a record. Employment remains strong.
Yes, growth is slowing, but a slowdown ≠ a crash.
If you avoided stocks over the last two years because you were bracing for a recession, you missed out on massive gains.
One more piece of evidence that the markets reward discipline, not chasing headlines.
Final thought
The world is noisy. But investing success comes from tuning it out, sticking to your process, and taking action according to rules, not predictions.
Turning this environment into an opportunity doesn’t require clairvoyance. It requires a plan that isn’t dependent on knowing the unknowable.
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