Why Knowing What You Own Matters in News-Driven Markets

Anyone following the markets recently likely caught wind of the DeepSeek AI news and the swift impact it had on several technology stocks. While I’m not dissecting that news specifically, there are plenty of analysts and experts offering detailed takes on the relative engineering merits between the Chinese and US technology companies, I do want to highlight one important principle I believe it underscored:

In my opinion, markets have become extremely news-driven. Share prices can swing dramatically in a single day if a development or headline challenges the prevailing narrative around a company. We’ve seen examples, like big tech names suddenly losing a notable percentage on unexpected news, only to rebound or shift course soon after. For investors, these short-term gyrations can be jarring and tempt even the most confident among us to panic.

But here’s the real lesson: in my opinion, knowing what you own and why you own it is crucial. Whether it’s a well-known chipmaker or any other stock, it’s essential to understand the fundamentals, the competitive landscape, and how much of the future prospects of company is already reflected in the share price. If you’re not investing directly, say you’re in a fund or private vehicle, make sure the manager is doing the deep work on your behalf. When negative news surfaces, your conviction is what stands between you and a rushed decision that, in my opinion, could undermine your long-term goals.

True conviction is rooted in thorough research, knowing the financials, leadership, product roadmap, industry trends, and valuation metrics. This goes well beyond reacting to the latest headline. When you truly understand your holdings, you’re more likely to see moments of volatility as opportunities for re-evaluation, not reflexive exits, or know when the thesis is changed and it's time to exit an investment.

At the end of the day, whether you invest in individual stocks, private companies, or professionally managed funds, in my opinion, the principle remains the same: do the work, or rely on someone who does. News will come and go, but a well-researched investment thesis, in my view, remains your best guide to weathering turbulent markets and staying aligned with your long-term objectives.

Disclosure: https://www.alphyncap.com/li-disclosure.html