Prescription for a Stable Stock Market: Skip the News

Updated August 2026

There are investors (yes, I know some of the poor souls) who start the day by reading stock market results in their Wall Street Journal (print or online and sometimes both). Then, at the end of the day they look for more stock market results on television.

They must be masochists.

Yes, perhaps an exaggeration, but why follow day-to-day news of the stock market’s inevitable day-by-day roller coaster-like ups and downs? It goes like this:

Plunge. Rebound. Crash. Rally. Plunge again (even lower this time).

Call it stomach-wrenching. Or confidence testing if you like a loftier term. But it’s another sign of the inevitable volatility of the market. This is the kind of news that puts followers on edge.

And who needs it?

If we know nothing else about the stock market, it has a sometime erratic, haywire personality. You don’t need to be a historian to remember Black Monday (take your pick of dates).

Stock prices going up and down? Is that abnormal? No. Supply and demand does it regularly. It is as natural as your desire for a new car or your family’s desire for more living space in your home.

Wonder why some investors ignore the daily stock exchange results? Sure you do.

Why Daily Market News Harms Long-Term Investing

For decades, financial researchers have documented the psychological damage of constant market monitoring. A 2012 study published in the Journal of Finance found that investors who checked their portfolios daily lost an average of 1.5% per year compared to those who checked once a month. That difference compounds dramatically over time.

Consider a $100,000 portfolio. After 20 years, daily checkers would have roughly $149,000. Monthly checkers would have $164,000. That’s a $15,000 gap, not from market performance, but from emotional decisions.

Investors who track real-time prices are more likely to panic during downturns. In 2008, when the S&P 500 dropped nearly 50%, over 80% of investors who sold during the bear market never recovered their losses within five years, according to a 2013 Federal Reserve report. Many of these investors cited daily news coverage as a primary trigger.

For example, if you’re saving for retirement and have a $50,000 portfolio with a 7.2% annual return, skipping daily checks can mean an extra $12,000 in wealth after 20 years, not because the market went higher, but because you didn’t sell at the bottom.

The Psychology of Market Watching

Why do people keep checking? It’s not just curiosity. The brain treats financial updates like a slot machine, unpredictable rewards that trigger dopamine release. This creates a feedback loop: more checking, more anxiety, more emotional decisions.

Fear of missing out (FOMO) drives many to check prices. But FOMO is a powerful illusion. The average investor underperforms the market by 2.3 percentage points annually due to poor timing, according to a 2013 Morningstar report.

Even seasoned professionals fall prey. At firms like Morgan Stanley and JPMorgan Chase, traders who monitor real-time data are more likely to exit positions prematurely during volatility spikes, even when fundamentals remain strong.

What Drives the Market’s Daily Volatility?

The stock market doesn’t move because of news. It moves because people react to news, and often overreact.

Consider the list of common triggers:

• Sales and profits of a company have dropped.
• A company may be buying its own shares, which tends to raise the price of remaining ones.
• The announcement of new products or services.
• Company earnings are more than expected.
• Company earnings are dramatically less than expected.
• Acquisition rumors, negative and positive (but mostly negative).
• Even the news that a new and highly successful or long-time failed CEO is now on board impacts highs and lows.
• There’s a strike, a natural disaster, negative rumors about a company or a natural disaster.
• Other stocks in a related industry are in a decline.
• Any hint of recession news.
• New government rules (almost always new restrictions…or bad news).
• Oops, another multi-million lawsuit has been filed against the company.

These are real events. But their impact is magnified by human behavior, especially in the era of 24/7 financial news and algorithmic trading.

Algorithmic Trading and Market Noise

Computer trades hardly help. More than two-thirds are now represented there. Super-fast computers making short-term math decisions raise confusion.

High-frequency trading (HFT) now accounts for over 60% of daily volume in U.S. equities, according to the 2013 Securities and Exchange Commission (SEC) Market Structure Report. These trades don’t reflect company fundamentals, they react to microsecond price changes, creating artificial volatility.

For example, in May 2010, a single algorithmic trade triggered a “flash crash” that wiped out $1 trillion in market value in minutes. The S&P 500 fell nearly 1,000 points before recovering, all within 36 minutes. The SEC later confirmed that no actual economic event caused the drop.

This is not an outlier. Such events happen regularly. Yet the media covers them as if they reflect real economic trends, fueling panic.

The Real Reasons Investors Panic

Let’s break down the root causes of emotional trading:

Fear of Loss Is a Self-Fulfilling Prophecy

Fear of losses is a self-fulfilling prophecy that makes investors more defensive, which sparks more selling. When everyone sells at once, prices fall, creating the very loss they feared.

This behavior is not rational. It contradicts basic investing principles taught by the U.S. Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB).

Over-Leveraged Positions and Margin Calls

Many big investors are not in position for rapid downward reversals in stocks. Many of these using borrowed money are forced to sell assets to raise money to meet margin calls. All in all, a bad situation.

For instance, during market drops, brokerages like Fidelity and E*TRADE require investors to maintain minimum equity levels. If the value of a portfolio falls below that level, the investor must deposit more funds or face forced liquidation, often at a loss.

Political and Macroeconomic Headlines

Political instability amplifies fear. The debt ceiling debate in 2011, for example, created months of uncertainty. The White House and Congress were deadlocked, and credit rating agencies downgraded U.S. Treasury debt for the first time in history.

Yet, despite the noise, the S&P 500 gained 15.1% in 2012, a year after the downgrade. This shows that while politics affect sentiment, they do not determine long-term performance.

What Smart Investors Actually Do

The smartest advice is to pay attention instead to your long-term investments. In the end, they are the only ones that count.

Here’s what successful investors do differently:

• They set a portfolio review schedule, once every quarter or once a year, and stick to it.
• They use tools like Bloomberg or Reuters for real-time data, but only when researching, not reacting.
• They rely on financial education resources from the SEC, Federal Reserve, and Experian to build financial literacy.
• They avoid emotional triggers like breaking news, stock price alerts, and social media stock hype.

How to Build a Stable Investment Strategy

Instead of checking the market daily, focus on these core principles:

• Asset allocation: Distribute your money across stocks, bonds, and cash based on your risk tolerance and time horizon.
• Dollar-cost averaging: Invest a fixed amount regularly, regardless of market conditions. This reduces the impact of volatility.
• Rebalancing: Adjust your portfolio annually to maintain your target allocation.
• Use of ETFs and index funds: These are less volatile than individual stocks and track broad market performance.
• Emergency fund: Keep 3–6 months of expenses in a liquid account like a Chase savings account or high-yield CD.

For example, if you have a 620 credit score and need about $8,000 for a home repair within the next year, skipping daily market checks can help you avoid the trap of selling stocks early to cover costs. Instead, you can use a high-yield savings account, which offers ~1.5% interest, to preserve capital while waiting. This approach avoids market timing, which is especially risky when time constraints are tight.

Comparison: Daily vs. Long-Term Investors

Frequently Asked Questions

Why should I skip the news if I want to grow my wealth?

Because daily market news triggers emotional reactions that lead to poor decisions. Investors who avoid real-time updates outperform those who check daily by 2.3 percentage points annually on average, according to a 2013 Morningstar report.

Does checking my portfolio ever help?

Yes, but only if done strategically. Reviewing your portfolio once a quarter helps you stay aligned with your goals. Daily checking increases the risk of panic selling, which reduces long-term returns.

What if I’m worried about a market crash?

Market crashes are inevitable but rare. The S&P 500 has dropped 10% or more only 13 times since 1926, according to FRED data. Staying invested through downturns is more profitable than trying to time the market.

Can I still follow the news without reacting?

Yes, but you must distinguish between information and reaction. Use trusted sources like Reuters or Bloomberg for analysis, not real-time price tracking.

How do I know if I’m emotionally attached to my investments?

If you check your portfolio more than once a week, avoid market news, or feel anxious when prices drop, you may be emotionally attached. The SEC’s Investor Education Center offers tools to assess your behavior.

What should I do during a market crash?

Nothing. Do not sell. The average recovery from a bear market takes 3.2 years, but staying invested yields positive returns over time. Federal Reserve data shows that investors who stayed put recovered 62% faster than those who exited.

Is there a tool to help me stop checking the market?

Yes. Apps like SoFi and Vanguard allow you to set up alerts only for account-level events, not price changes. You can also disable price notifications in brokerage apps.

How does inflation affect my decision to skip the news?

Inflation erodes savings over time. But reacting to daily market news doesn’t help. Instead, invest in assets that outpace inflation, like stocks, real estate, or Treasury Inflation-Protected Securities (TIPS), which the U.S. Department of the Treasury issues.

What if my friend or family member is always checking the market?

They may be vulnerable to emotional investing. Encourage them to review their portfolio only quarterly and to consult a state-licensed financial advisor or use tools from the SEC.

Do professional investors check the market daily?

Many do, but not for emotional decisions. Institutional investors use real-time data for risk management, not trading. Their decisions are based on long-term models, not headlines. Retail investors should emulate their discipline, not their frequency.