A core skill for all investors is the ability to understand the difference between signal and noise.

Signal refers to the relevant, accurate, and helpful information investors rely on to make informed financial decisions. Noise, conversely, is any information that distracts investors, shifting their focus from long-term objectives to short-term concerns. This noise often takes the form of sensationalised news headlines, short-term market forecasts, and market commentary.

As long-term investors, separating signal from noise is crucial to making rational, evidence-based decisions that align with our financial goals. Even during normal times, noise far outweighs the signal of useful information. 

Elections and Media Noise
Elections have a way of bringing out the worst in political discourse. The airwaves and newsfeeds are filled with politicians making bold claims and attacking their opponents. The media often amplifies this divisiveness, making it challenging for investors to separate fact from fiction.

Incumbent leaders will claim credit for any positive economic developments during their leadership. They'll paint a rosy picture of the future, promising continued growth and prosperity if re-elected.

Conversely, the opposition will blame the current administration for economic hardships, such as high inflation, unemployment, or market volatility. They will argue that a change in leadership is necessary to get the economy back on track.

It's important to remember that making long-term financial decisions based on these claims is rarely wise. Political rhetoric is often exaggerated and oversimplified, ignoring the complex realities of the global economy. While short-term volatility may occur, the long-term trajectory of financial markets is influenced by many factors beyond any single election or political party.

Smart Strategies To Navigate The Noise

What can you do to navigate this tidal wave of election noise?

Trust your well-crafted, long-term financial plan instead of getting caught up in the short-term noise. This plan should be based on your goals, investment return requirements, and time horizon. Only make changes to your portfolio if your financial goals or circumstances have changed.

Your financial plan is built on historical evidence and realistic market assumptions, designed to help you weather any short-term turbulence and achieve your long-term objectives.

Ask Yourself - How Much Impact Does the US President Have on Stocks?

Have you ever wondered how the US stock market has performed under each President? Dimensional Fund Advisors have produced a wonderful infographic showing the performance under each president. Press on the link below to view the article – to see the data during each presidency click on the image of each president. 

https://www.dimensional.com/ie-en/insights/how-much-impact-does-the-president-have-on-stocks

A Vote For Your Financial Future
In the coming months, your mind will become a battleground for attention. Politicians and media outlets will vie for your focus, hoping to sway your opinions and decisions. Campaign ads, debates, and news coverage will dominate the airwaves, making it difficult to escape the constant buzz of election season.

While it's important to be informed, don't let the noise of the election drown out your long-term financial goals. In the face of the approaching tidal wave of election noise, remember to focus on what matters most: your financial well-being and long-term goals. By tuning out the noise and staying committed to your investment strategy, you can confidently navigate this challenging period and emerge with your financial future intact.