April stirred investor anxiety, especially in its early weeks. Negative headlines flooded financial news, each seeming more alarming than the last. On April 7th, the Wall Street Journal declared a “US Stock Meltdown” leading to a “Global Rout,” the New York Times predicted “More Chaos” on Wall Street, and Reuters reported “US Stocks Nosediving.” But the Wall Street Journal’s April 21st headline, “Dow Heads for Worst April Since the Great Depression,” truly sparked dread. By evoking the “Great Depression,” a period of economic ruin, this headline powerfully triggered fear.

These headlines illustrate how the media, seeking readership and views, can inadvertently (or intentionally) trigger emotional reactions that harm investment decisions. The dramatic language paints a picture of imminent catastrophe.

Faced with such alarming news, many instinctively protect their assets. The fight-or-flight response induces investors to sell holdings to avoid further losses. Imagine an investor, gripped by fear after reading that headline, liquidating a significant portion of their portfolio.

Now, fast forward to today, May 12th, 2025. The chart below shows the stock market (S&P 500 index) rebound. Those who succumbed to headline-induced fear and sold missed this recovery. They now watch potential gains vanish and face the challenge of re-entering the market at higher prices.

This scenario highlights a crucial lesson: emotional reactions to short-term market noise, amplified by dramatic headlines, are your portfolio’s greatest threat.

The financial news cycle thrives on volatility and uncertainty, which generate clicks and views. Headlines are designed to grab attention, and negative news often dominates because it elicits stronger emotional responses than positive or neutral updates. The human brain’s sensitivity to potential threats, a survival mechanism, can lead to irrational investment decisions.

Why emotional selling costs you:

• Missed rebounds: Markets are cyclical. Sharp downturns are often followed by recoveries. Selling during a dip locks in losses and prevents participation in subsequent gains.
• Futile market timing: Predicting the market’s absolute bottom and perfectly timing reentry is notoriously difficult, even for professionals. You risk missing the market’s best-performing days, significantly impacting long-term returns.
• Compounded losses: Selling low and buying high is the opposite of successful investing. Emotional selling forces this behavior.
• Disrupted long-term strategy: A sound investment plan relies on a long-term perspective, diversification, and understanding market fluctuations. Reacting to every alarming headline can derail this carefully constructed strategy.

Stay the course: A rational approach

Instead of reacting emotionally to fear-inducing headlines, consider these principles:

• Focus on long-term goals: Remember your investment goals – retirement, education, financial security. Short-term market swings are often just noise in the context of decades-long investment horizons.
• Diversify your portfolio: A well-diversified portfolio across different asset classes can cushion the impact of market volatility in any single sector.
• Have a plan and stick to it: Develop a sound investment strategy based on your risk tolerance and financial goals and resist the urge to deviate based on short-term news.
• Tune out the noise: Limit exposure to constant news updates and sensational headlines. Focus on reliable, long-term analysis rather than knee-jerk reactions to daily market movements.
• Seek professional advice: If you feel overwhelmed or anxious about market volatility, consult a qualified financial advisor for objective guidance and help stay on track.

The headline “Dow Heads for the Worst April Since the Great Depression” achieved its aim: it grabbed attention and likely boosted readership. However, for investors who reacted impulsively to the fear it instilled, the consequences could have been detrimental. The subsequent market recovery powerfully reminds us that disciplined, long-term focus and avoiding emotional decisions are crucial for building lasting wealth. Don’t let sensational headlines dictate your financial future — stay the course.

IMPORTANT DISCLOSURE

This is a publication of Signet Financial Management, LLC.

The information presented is believed to be factual, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Information in this presentation does not involve the rendering of personalized investment advice. It is limited to the dissemination of general information on products and services. A professional adviser should be consulted before implementing any of the options presented.

Information in this presentation is not an offer to buy or sell, or a solicitation of an offer to buy or sell the securities mentioned herein. Information on this presentation is directed toward U.S. residents only. Signet only transacts business in states where it may legally do so.