The Noise Visualized

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Since 2000, there have been 364 days when the S&P 500 has closed up or down by two percent. On average, this means one two percent move every 11 days.

Below, the red dots represent every two percent day.

NOISE

The media loves these two percent days and Mr. Market is happy to provide them all the time. With every two percent day, the media gets a chance to attach a narrative to the move:

“____ fears spark a global sell off.”

“____ provides a tail wind to stocks.”

It’s extremely difficult to maintain discipline when there are always stories to provoke you to act. Because stocks fluctuate so much, it’s critical that you have a investment plan in place, or at least a general investing philosophy. Having a set of beliefs to guide you is how you tune out the noise.

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