Turn on the financial news on any given day and you’ll hear a steady stream of explanations for why the market moved up or down. A report came in stronger than expected. A geopolitical event rattled investors. Interest rates may rise or fall.

The message often implied is that if you simply stay informed enough, you can anticipate what the market will do next.

Unfortunately, markets don’t work that way.

One of the biggest dangers for investors is making decisions based on headlines. News can feel urgent and important, but the relationship between major events and market outcomes is often far less predictable than people expect.

A good example comes from just a few years ago.

Collin Randall, CFA, CFP

Imagine it is January of 2020 and someone gives you a preview of what is about to happen that year. You are told a pandemic will shut down economies around the world. Businesses will close, travel will stop and unemployment in the United States will surge to nearly 15% — the highest level since the Great Depression.

If you had that information in advance, what would you expect the stock market to do?

Most people would likely assume markets would collapse and stay down for quite some time. Yet, by the end of 2020, the S&P 500 had produced a return of over 17%. One of the most economically disruptive years in modern history ended up delivering a strong year for investors.

That disconnect surprises many people, but it illustrates an important truth: markets don’t react to events themselves. They react to expectations and how reality compares with what investors already anticipate.

This is why reacting to news can be such a dangerous investment habit. Headlines tell us what has already happened, but markets are constantly looking forward. Prices reflect the collective expectations of millions of investors trying to anticipate the future.

By the time a story makes the evening news, the market has usually already processed it.

That doesn’t mean staying informed is a bad thing. Understanding economic trends and major developments can be helpful. But using headlines as a guide for when to buy or sell investments often leads investors to make emotional decisions at exactly the wrong time.

History repeatedly shows that successful investing is less about predicting the next headline and more about maintaining a disciplined plan. Markets will often respond to events in ways that surprise us. The key is recognizing that uncertainty is not a flaw in the system, it’s simply part of how markets work.

In the end, the most reliable strategy has rarely been reacting to the latest news. It has been staying focused on long-term goals and allowing time and discipline to work in your favor.

Collin Randall, CFA, CFP, is a financial adviser at Randall & Associates Wealth Management, with offices in Butler and Warrendale. Randall & Associates is a registered investment adviser and does not provide any legal, accounting or tax advice. The material prepared is the opinion of the author and for informational purposes.