The Impact of Noise on Long-Term Investing

Investors often become overwhelmed by the flood of information that affects stock prices, including earnings reports and economic data. This distraction can lead to poor decision-making, as many investors react to news without understanding its true impact on market fundamentals. For example, an impressive earnings report might lead investors to buy a stock, only to find it dropping in value because the results failed to meet heightened expectations. The key takeaway is that for long-term investors, such distractions are largely meaningless since the market has already adjusted to new information before individual investors can respond.