Ignore current events

The drama south of the border continues and it’s making many investors here in Canada nervous.

After a campaign filled with wild claims and promises, President Donald Trump significantly toned down his comments, and twitter account, as inauguration time neared.

While this led to some hope that things would settle down, the full-on crazy appears to be back.

The recent failed health care reform vote highlighted just how dysfunctional the U.S. government is right now and its ability to operate effectively is severely reduced.

Investors are wondering what this means for their investments and the stock market in general and many are wondering if they should be making any changes. The best plan of action? Do nothing because portfolio decisions based on current events are never a good idea.

For example, take a look at the first six weeks of 2016.

By the end of the first month, the media ran headlines about the worst first month in history.

By Feb. 11, the S&P 500 sat at 1,829 and the U.S. markets had endured the worst start to the year in history. Why did all this happen? I don’t have a clue but there were no major current events to point to.

I do know the bad news for the year hadn’t occurred yet.

So we can assume the markets must have gone down more, right?

First came Brexit, the U.K. vote to leave the European Union.

Leaders from around the world told anyone who would listen the vote would surely create a global economic disaster.

However, after day after the vote the S&P 500 was up 11.4 per cent.

Next came the U.S. presidential election.

Mainstream media across the world forecasted the election of Trump would surely usher in the end of all economic life.

Yet, the S&P 500 went up another 6.2 per cent.

Well, the U.S. is in chaos politically, the S&P 500 continues to go up.

Do you see a common theme here?

There is very little correlation between current events and stock market performance.

The real key to making money in the stock market is to be welldiversified and not get scared out of it.

Successful investors act continuously on a well-thoughtout plan.

Failed investors reacting continuously to current events.

It’s up to you to decide what type of investor you would like to be.