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Another thoughtful offering from Ted: "I remain confused as to why investors are so fixated by financial news."
Let's try to clear the confusion. What passes for financial "news" is often overblown trivia presented in compelling fashion by professional carnival barkers on TV or glitzy writers whose copy-editors have already distorted the original message. Since their ultimate mission is to keep you entertained (and tuned in), they might as well be selling stuffed Teddy Bears (no pun intended) or fake gems. It's pretty hard for the average person to sort out the truly relevant information from the irrelevant. Chances are that by the time we recognize and digest the truly relevant information, it has already been known and discounted by the markets for some time.
On a lighter note ... tuned to CNBC Friday afternoon hoping to get a quick glimpse of closing market numbers. Not go be found. Instead, they were airing a show about classic cars:-)
I can find no credible data indicating any relationship between keeping abreast of financial news and increasing your investment returns. The opposite seems to be true: Paying close attention to the financial information du jour probably contributes to “negative alpha.” The only “increase” I have observed is in the anxiety and stress of those who engage in this practice.
Thank you Ted for the comforting reference. Since it touts very inactive investing and a rejection of the daily business news interpretation chaos, it reinforces a conformation bias that I favor in that arena. Much of what is reported and analyzed to excess is really market noise, especially for longer-term investors.
Solin’s article delivers a softball directly into the wheelhouse of my present investment philosophy. Currently, I review my portfolio five times annually. I check its valuation quarterly and when I’m preparing to complete my IRA minimum mandatory required withdrawal. I’ll be doing that latter task in the next few weeks.
Solin has been a passive Index portfolio advocate for a long time. He writes in a manner that often excites controversy. He is the author of the bestselling series of books that have titles starting with “The Smartest…..” . For example, Solin wrote “The Smartest Investment Book You'll Ever Read: The Proven Way to Beat the "Pros" and Take Control of Your Financial Future”. The book is almost too easy and simple, but it surely does outline his fundamental investment strategy.
But the Solin article is grounded on an analysis generated by Bryan Harris. I am not familiar with Harris or his investment credentials, but since I’m often inclined to search for original sources, I located a likely referenced article on the Internet. It is a fine piece of work that includes some excellent graphs that correlate market price levels with news releases. Here is a Link to a summary article that Harris helped prepare:
I particularly liked this summary statement from the Harris headline research: “These headlines are not offered to explain market returns. Instead, they serve as a reminder that investors should view daily news events from a longer-term perspective, and avoid making investment decisions based solely on the news.” Amen to that observation.
Comments
Let's try to clear the confusion. What passes for financial "news" is often overblown trivia presented in compelling fashion by professional carnival barkers on TV or glitzy writers whose copy-editors have already distorted the original message. Since their ultimate mission is to keep you entertained (and tuned in), they might as well be selling stuffed Teddy Bears (no pun intended) or fake gems. It's pretty hard for the average person to sort out the truly relevant information from the irrelevant. Chances are that by the time we recognize and digest the truly relevant information, it has already been known and discounted by the markets for some time.
On a lighter note ... tuned to CNBC Friday afternoon hoping to get a quick glimpse of closing market numbers. Not go be found. Instead, they were airing a show about classic cars:-)
Thank you Ted for the comforting reference. Since it touts very inactive investing and a rejection of the daily business news interpretation chaos, it reinforces a conformation bias that I favor in that arena. Much of what is reported and analyzed to excess is really market noise, especially for longer-term investors.
Solin’s article delivers a softball directly into the wheelhouse of my present investment philosophy. Currently, I review my portfolio five times annually. I check its valuation quarterly and when I’m preparing to complete my IRA minimum mandatory required withdrawal. I’ll be doing that latter task in the next few weeks.
Solin has been a passive Index portfolio advocate for a long time. He writes in a manner that often excites controversy. He is the author of the bestselling series of books that have titles starting with “The Smartest…..” . For example, Solin wrote “The Smartest Investment Book You'll Ever Read: The Proven Way to Beat the "Pros" and Take Control of Your Financial Future”. The book is almost too easy and simple, but it surely does outline his fundamental investment strategy.
But the Solin article is grounded on an analysis generated by Bryan Harris. I am not familiar with Harris or his investment credentials, but since I’m often inclined to search for original sources, I located a likely referenced article on the Internet. It is a fine piece of work that includes some excellent graphs that correlate market price levels with news releases. Here is a Link to a summary article that Harris helped prepare:
http://www.assantefirstavenue.com/index.cfm?PAGEPATH=&ID=47246
I particularly liked this summary statement from the Harris headline research: “These headlines are not offered to explain market returns. Instead, they serve as a reminder that investors should view daily news events from a longer-term perspective, and avoid making investment decisions based solely on the news.” Amen to that observation.
Enjoy, learn, and prosper.
Best Wishes and have a Happy Holiday season.