Using the Latest Stock Market News!

by Jeff C. Johnson

Latest stock values on smartphone

Today, our society benefits and suffers from an information surplus. Some information is valuable and helpful; some information is harmful.

A young farming couple came to see me (I think of age 55 as young!) for guidance on how to improve their financial situation. They had taken my retirement planning class at the local community college a few months before and asked me to help them reduce their taxes and save for the future.

After a review of their accounts, assets, and goals, I found they had substantial free cash flow that was fully taxable. They could set up a pension plan and save, and deduct from their taxable income, over $100,000 per year, as well as boost the return they were earning on a very large chunk of cash. This action would have been a small step toward a more diversified asset base as they neared retirement.

Later, they called back to thank me for my time but said they had decided to “stay put.” What does “stay put” mean, anyway?

After watching the news, they told me, the stock market was so wild that they were afraid to invest in it and instead had decided to buy more farmland. In other words, they planned to diversify by buying more farmland at all-time high prices because they focused on short-term thinking.

This is just one example, though I have many others, of the news media scaring people away from a long-term course of action that could have been very beneficial for them.

Taking advantage of the long-term growth opportunities offered by equity investments does not have to be difficult. It does require long-term thinking and focusing on the future, not the evening news or stock market commentators. Discovering an evidence-based, repeatable process and sticking to that plan is far more likely to yield positive results over long periods.