Why long-term investors should always ignore the market noise

In over two decades of managing investments, I have never once read a headline that indicated everything is fine and markets are ticking along nicely. That is not by chance. 

This is not a criticism of the media - it is simply how the information economy works. 

But it has a real and measurable effect on investor behaviour and understanding that effect is one of the most important things any long-term investor can do.

Lacking in context

The volume of market commentary available today is without historical parallel. Thirty years ago, most of this information simply would not have reached the average investor. 

Now it arrives continuously, across multiple channels, often simultaneously contradictory, and calibrated by algorithm to maximise the emotional response. 

The result is a constant barrage that makes it genuinely difficult to distinguish between developments that matter and those that do not. Getting that distinction right is, in my view, the single most valuable analytical skill an investor can develop.

The framework I return to is that of fundamentals. Most geopolitical noise, most political theatre, most short-term volatility does not alter the underlying earnings trajectory of the companies in a diversified portfolio. 

When a government changes, when a central bank governor gives an ambiguous press conference, when a trade negotiation stalls - these events can produce sharp intraday moves and generate weeks of commentary. 

But if they do not materially change the path of earnings, dividends and long-term growth, they are, for most investors with an appropriately long-time horizon, irrelevant. The correct response is to hold the line.

Altered

The important caveat is when geopolitical events do alter fundamentals. 

The disruption to shipping through the Strait of Hormuz is a useful live example of how to think through the chain. A sustained closure raises oil prices. A rule of thumb we use is that a 10% rise in oil translates to roughly 40 basis points of additional inflation.

Scale that to the moves we have seen recently, and you are talking about a meaningful inflationary impulse, one that reprices rate expectations, feeds through into bond markets and ultimately affects the cost of capital across the economy. 

That is a genuine fundamental shift. It warrants attention. Not all the noise around it does, however.

Investor psychology

The discipline is in learning to make that distinction quickly and consistently. 

Ask not whether something feels alarming, but whether it alters the fundamentals. Does it change earnings? Does it change the rate environment? Does it change the structural growth outlook for the assets you hold? 

If the answer to those questions is no, the correct response is to return to your investment thesis and do nothing. If the answer is yes, as it was when oil prices began to move materially this year, then the conversation about positioning changes.

This is easier to describe than to do. Investor psychology runs almost precisely counter to what rational decision-making requires. The instinct when markets rally strongly is to buy, because rising prices feel like confirmation that the environment is safe. The instinct when markets fall is to sell, because falling prices feel like confirmation that the worst is coming. 

Both instincts are, in the aggregate, wrong. They invert the basic logic of value. Buying high and selling low is not a failure of intelligence - it is a failure to override emotional responses that were never designed for financial markets. The person who sells out near the bottom, despite having articulated a long-term risk appetite just months earlier, is not being irrational in the narrow sense. They are responding to fear, which is an entirely human reaction to uncertainty.

Conclusion

The challenge is that you cannot simply tell people to ignore their instincts. The instincts are real, and the noise feeding them is relentless. What you can do is help investors build a framework robust enough to survive the emotional pressure of a difficult market. 

That means agreeing the investment thesis when conditions are calm, stress-testing it against realistic downside scenarios, and establishing in advance what would change the case for holding; not what would feel uncomfortable, but what would genuinely alter the fundamental picture. When the answer to that question is clear, the noise becomes considerably easier to tune out.

The mantra should be to monitor the stream of information, filter out the noise, identify when something genuinely matters and act accordingly. The Iran situation is a case in point. The inflationary transmission mechanism is real, the repricing of rate expectations is real, and the portfolio implications are worth addressing. But that analytical work happens at the level of fundamentals, not headlines. 

In most market conditions, the single best thing investors can do is resist the pull of the daily narrative, maintain their long-term discipline and let the fundamentals do the work.