News headlines can lead investors to make poor investment decisions

With average annual returns of just 2.9% for the 20-year period from 2000 to 2020, the average investor underperformed virtually every asset class, from the 8.7% return of small cap stocks to the 3.0% return of short term bonds. What’s the reason for this lackluster performance? According to a Nationwide white paper, frequent trading is a primary culprit, and much of that is the product of investors trying to time the market in reaction to news headlines. With digital platforms dominating news coverage these days, it’s never been more important to help your clients counter the lure of news headlines. This white paper examines the role headlines play in emotional investment decision making and provides ideas to help your clients stay focused on the principles of long-term investing. We encourage you to access it now: