All of a sudden volatility has come back. Over the last several weeks we have seen sharp one day selloffs that has sent the media into an absolute frenzy followed by large surges the next day with the media telling you now is the time to jump in. For the average investor it has been more than just a little confusing as to what should be done with portfolios.

It is sometimes very confusing for investors to discern what they should be doing because of the day to day noise from the media. As I stated above; the media attributes whatever is happening during a particular trading session to the news item of the moment – whether it is relevant or not.

This presents a real difficulty for investors to navigate the management of their portfolio – which is why most individuals simply don’t. This is why we encourage you to step back from the day to day “noise” to see the bigger picture. It is much like art – take a look at a very famous work of art below.

When you stand too close to the painting you lose perspective, detail and the connectivity of the overall painting. However, if you step back you see Claude Monet’s “Sunrise.”

This is the primary problem for fundamental investors. The focus on financial ratios, historical comparisons and valuations keeps analysts, and portfolio managers, standing too close to the market. This is why they consistently miss the detail and connectivity of the overall environment.

This is also the same problem that individuals face daily when reading the latest headlines or listening to the financial media. Daily headlines rarely have anything to do with market action in the short term. However, each day, we are inundated with the details of some economic, or corporate, report that is responsible for moving the entire market. Even though this is absolutely not the case; individuals, and professionals, continue to stand too close to the painting and miss the broader detail.

Take a look at the chart below.

…..read the whole 17 page report HERE