Even if you can finish the sentence, it’s a waste of time…

“The market’s set to fall because…”

It’s a phrase (sometimes changed slightly to keep it fresh) that has launched a thousand finance news segments, and that has adorned the top of another thousand newspaper articles.

You know the ones:

“Market set to fall on OPEC news”

“Market set to fall on Brexit fears”

“Market to open lower on weak lead from Wall Street”

And they’re right. But for the wrong reasons.

If you ever want to understand the impact of herd behaviour, just watch the opening few minutes of trade on the ASX every morning.

Here’s how it goes:

First, say, the US stock markets — “Wall Street”, in the parlance — fell overnight, our time. There was probably a reason, but just as likely no reason at all. Maybe Janet Yellen gave a speech. Or Chinese data was released. Or Tom Cruise is getting married again.

Then, Australian investors and traders figure that, well, Wall Street fell, so our market should, too. And, like the proverbial self-fulfilling prophecy, down we go.

Why? Well, because Wall Street did. And why should that matter? Well, it shouldn’t, really.

If Apple is having a bad day, Woolies sales don’t fall. And if Wells Fargo is suffering because of its banking scandal, BHP’s mining operations continue unabated. You get the idea. There’s no reason that our companies’ shares should drop just because American shares do.

But because investors expect them to fall, they don’t blink an eye when it happens, reassured in the knowledge that they were right all along. See — easy!

Now, if you’re trying to day trade (and God help you if you are), you pretty much need to play the game. You’re in the business of guessing what other people do. Those people are trying to guess what others will do, by the way, so you’re really guessing what others are guessing that people will do. And yes, it goes on and on in a vicious circle.

But you don’t have to play that game. In fact, you shouldn’t.

Wall Street fell overnight. So what? It won’t impact how many televisions JB Hi-Fi sells this year. Or how many cochlear implants Cochlear makes. And it won’t change how much health insurance NIB writes.

So, through that lens, any time the market decides it doesn’t like a company — or all companies — on a given day, you’re welcome to take advantage of that short-sightedness. Indeed, you should take advantage of it, if the price is attractive enough.

Because Wall Street might well be up tonight…

Foolish takeaway

But even if it’s not, as long as you’re buying quality businesses with bright futures at attractive prices, today’s share price movements will be totally immaterial to your long-term returns.

And if you already own those businesses, and you liked the price yesterday, you certainly shouldn’t let Wall Street — or Brexit or Deutsche Bank or anything else — scare you out of holding, just because the herd is running fast in one direction or another.

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Motley Fool contributor Scott Phillips (TMFGilla) has no financial interest in any company mentioned. You can follow Scott on Twitter @TMFScottPThe Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.