This Just In ... | Financial Planning Chapel Hill l Old Peak Financial Advisors

This Just In …

November 16, 2017


This Just In …

November 16, 2017

This just in …

Today’s news is extremely unlikely to have any impact on today’s stock prices.

And no, that’s not a typo.

Two weeks ago, the Republican Party unveiled a tax plan that envisions large cuts to corporate tax. If passed, company profits will increase significantly. But the stock market didn’t really move.

The explanation: the market has been anticipating this tax cut since Trump was elected. The only stocks that reacted to the news were individual stocks (housing, for example) where the news was different from expectation.

So … should we keep our ears to the ground for rumors and buy/sell based on those?

Three problems. First, how do we know what to believe and what to ignore? (That’s hard.) Second, can we buy before everyone has already bought? (That’s even harder.) Third, do we even know if the market will react, and how? (That’s harder still.)

The clear instances when the news will impact the market are when the news is completely unexpected. Think 9/11, or an out-of-the-blue earnings surprise. If you can divine those, you have an amazing skill. Move to Vegas.

The rest of us should ignore the news, at least for investing. We desperately want explanations for why the market goes up or down, and we want, even more, a leg up. But the market is smarter than most of us, because it represents the collective wisdom of millions of people. So, don’t try to out-guess it. Instead, hop on. The ride will be bumpy, and sometimes downright scary. But if you have a long-term view, history suggests you’ll be happy with the destination.

This article is not intended to provide tax, legal, accounting, financial, or professional advice. Readers should seek advice from qualified professionals who can review their specific circumstances. Old Peak Finance endeavors to provide information that is accurate and current. However, we cannot guarantee that this information has not been outdated or otherwise rendered incorrect by new research, legislation, or other changes. Old Peak Finance has no liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website.

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