Short-Term Focus Does Not Lead To Long-Term Profits

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There are many characters that make a successful investor, like patience, doing a lot of research and fact-based decisions.

Among them, one of the most important factor is the ability of not being influenced by market noise when it comes to making investing decisions.

The market always have something to say about a particular stock and can easily provide you a thousand of reasons why you should invest and why you should not invest at the same time.

This is a problem because it really impairs your ability to make a wise decision and brings you to information overload.

There are very good reasons why you should not pay attention to all that buzz, here’s why.


Markets and Financial News are Short-sighted

One thing that many investors end up ignoring when they get sucked in the circle of financial news and information, is that 99% of what analysts and financial news has to say is focused on the short term

In other words, unless you are a speculator that cares about where the stock will be in the next week, you can be easily unbothered by all that mess.

If you invested into a stock that has a long-term growth potential and good business perspectives, why on heart should you care about what the market has to say about quarterly results?
Don’t you want to build a portfolio over time that is invested in that kind of stocks?

One of the major threat to your investing success is that most of the time, what the markets have to say (that is almost entirely based on the next quarter) ends up influencing your behavior.

If you are in for the long-term, this is a huge problem that will definitely lower your returns.

Avoid Noise And Keep the Focus On Facts

If you are able to avoid the noise and shift your focus on facts you odds for success increase dramatically.

Avoiding market noise is actually one of Warren Buffett’s suggestions. This is also on of the reasons why he lives in Omaha, far away from Wall Street’s distractions, claiming to have all the facts needed to make decisions.

He speaks very clearly on that. In an interview, he said that:

If I were in Wall Street I’d probably be a lot poorer now. You get overstimulated on Wall Street. You hear lots of things and you may shorten your focus, and a short focus is not conducive to long term profits.

Here (in Omaha) I can just focus on what businesses are worth. I don’t need to be in Washington to figure out what the Washington Post newspaper is worth, and I don’t need to be in New York to figure out what some other company is worth.

He clearly states that having too much information leads you to shorten your focus and brings you to making wrong investment decisions. Living in Omaha is a way to keep far from Wall Street noise and overstimulation.

Successful investors seek for value in the business and develop a long-term view on the potential scenarios for the business, not the stock price.

Most investors and especially the internet and financial media don’t have a long-term focus. 

We currently live into an environment of information overload and the internet helps to amplify it. That could easily push us into making an irrational move.

Realize this and free yourself from the market noise of financial news noise.
How? Just ignore them, you don’t need it for your investing decisions.

Do like Buffett, seek for value, focus on the business, keep a long-term perspective and base your decision making process on facts.

This article is for informational purposes only, it should not be considered financial advice. You can read the full disclaimer here.

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