It is a good idea to be mindful of news and information surrounding your investments. However, try not to abandon a well conceived, disciplined investment strategy to chase performance, the initial underlying reasons for buying a holding may still be valid.

Some people may be tempted to alter their investing plans in response to short term shifts in market conditions. But news about certain securities or sectors that have generated significant recent returns, or hearing about a friend who has made large gains in the market, may not be sound reasons to change an investment approach. Chances are that these people have a tendency to overvalue new information. In addition, behavioral economists suggest that people may believe the facts they have about a particular financial market or sector are more important that the information they may lack. This overconfidence may lead them to make important financial decisions based on incomplete information.

By maintaining a sound investment strategy you will most likely avoid the need to react immediately to changing market conditions. Adhering to your strategy can prevent you from disrupting the balance of your investments and, as a result, purchasing funds without considering how they fit within your overall plan.

Evaluate how each decision you make will affect your overall portfolio. Before you buy or sell a portfolio holding, research multiple objective sources. Analyze the investment’s long term potential and determine whether it complements your strategy, not just how it’s performing right now.