One post on social networks can bring down the capitalization of the largest companies or cause a rapid rise in stock indices. Should you be guided by the news when choosing securities for investment?

“Two Trump Tweets Have Collapsed World Indices” — all business publications with such headlines appeared on May 5, 2019. The American president began this morning as usual with a Twitter post. He

There are plenty of similar examples: not only the stock index, but also the currency or capitalization of the largest company can collapse due to one tweet or message in the media. So, after the news about the possible purchase of «Yandex» by Sberbank, the quotes of the Internet company

Sometimes the reaction is the opposite: shares of the tech giant Tesla

To the Mask post

What is Trump or Musk — one tweet of popular model and entrepreneur Kylie Jenner brought down Snapchat’s capitalization, as soon as she expressed bewilderment about the new design of the application.

The movements of individual securities can be chaotic due to the news and the panic caused by it. Another problem with news-based decision making is that news can be fake. Dozens of companies and investors are suffering from fake news.

In September 2012, an employee of the Chinese newspaper New

It is not worth making investment decisions, succumbing to a momentary impulse against the backdrop of news. If you are ready to put in a great effort, then you can, of course, analyze the financial statements of companies and study official statistics (for example, on the state of the labor market or on the level of wear and tear of production equipment).

But a more efficient way is to remove the risk of individual companies through diversification. It allows you to continue doing what you love without diving into the «fascinating» world of financial ledgers.

Diversification with individual securities is not a panacea:

ETF shares protect against market surges associated with individual companies: because of a bad joke, the quotes of one IT company can crash, but not ten times.

ETFs are sustainable. Kylie Jenner can’t handle it.

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