July 16, 2015
“Because humans have evolved to continuously monitor their environment in search of threats, the news that interests us most is bad news. The news media are only too happy to oblige.” Ross Gittens
It would have been hard to miss the headlines about the "Greek Tragedy", "Grexit" and then the fall in the Chinese share market index in the last few weeks.
In light of Gitten’s recent article in the SMH about negative thinking however it’s worth remembering that we’ve been aware of the Greek situation for sometime so we’re almost used to living with the situation.
It’s not that what’s happening around the world is not important when it comes to your investment portfolio but volatility is the constant.
The lesson that is there for the learning is the importance of diversification. Knowing how your super is invested is crucial and something about which we should all be proactive.
US author Steven Kotler argues that we are pre programmed to look for ‘danger’ hence our fight or flight responses in many situations. In the era of instant communication however we are faced with what is essentially an information processing problem. How does the amygdala qualify the nature of the present danger? The simple answer is, it can’t. The old newsprint adage, “If it bleeds, it leads” is especially true today because it applies to much more than the print media and we cannot help ourselves from checking out the bad news stories.
We’re all prone to pessimism at times. The trick is to gain perspective as quickly as you can and to recognise that you may need to find it by turning to the experts, such as your financial adviser.
In the spirit of optimism therefore - did you know that the Chinese stock market had more than doubled over the previous 12 months? That didn't really make the news until the market started to correct (i.e. fall). It's still currently substantially ahead over the past year.
So there is good news out there if you look for it.