If you are going to make a habit of watching shows like Fast Money, MAD Money, Squawk Alley, etc., it is important to remember the motivations of the show and the network.
Remember that you are watching a television show. Sure there will be moments where you can “learn something new,” or become a more informed citizen, but always remember the goal of the TV show is maintain and hopefully increase viewers.
A couple of things about these “market related/business” shows. 1. They love the bears. Despite the fact markets are statistically much more likely to be bullish, these shows love guests and analysts that are bearish. These shows disproportionately trot out “experts” that confident the markets are going to plummet next week, next month, next quarter, etc. 2. They love high activity trading. Never mind that the average investor tends to correlate better returns with fewer trades, these shows will be recommending investors Buy MCD in January and Sell in March. 3. They sell trading and speculation as investing. Speculation should never be used interchangeably with investing. These programs often promote trades based on expected price movements over short-term periods. Over short-term periods price movements are very much sentiment and momentum driven which is inherently speculative.
Excitement, fear, and panic bring in viewers; therefore CNBC and the like happily sell excitement, fear, and panic (their favorite) every day.
I often recommend clients not watch any of the “investing” TV shows, because all too often the shows are promoting some course of “action” when the best course is “inaction.”
I will throw one bone out to NBR the Nightly Business Report on PBS each night. NBR is a great 30 minute recap of the day’s market and business events. Also NBR tends to have significantly more guests with good ole boring investing advice, and not so much fire and brimstone.
Happy Anniversary! The Bull Market turned 7 today!
That’s right, we’ve reached the 7 year point in the current bull market. It’s been a very bumpy ride (it always is), but old Mr. Market has continued to chug along.
Inevitably during these last 7 years pundits, professionals, the media, your bus driver, etc. have seen the signs of the oncoming bear market or the “double dip” recession. They’ve been wrong up to this point, and the correct investor action over these last 7 years was to be long stocks.
Corrections and volatility are a normal part of the market cycle. When volatility and market corrections influence an investor it usually leads to bad underperformance.
I believe that Warren Buffett said that “the stomach is much more important than the mind when investing.”
I leave you with a little tidbit of data, the Vanguard World ETF (VT) had an average annual return of 14.25% since March 9th 2009 and a cumulative return of 153.38%. The S&P 500 has a cumulative return of 231.23% over the same time period. (I never recommend being 100% US weighted, also this data is 03/09/2009 – 02/29/2016)
How did your portfolio fare these last 7 years?
Investors beware of managers that use a great deal of industry lingo such as “hedging instruments, yield enhancement methods, risk adjusted rates of return, derivative strategies, etc.”
I find that too many managers use industry lingo to confuse clients, make it sound like they are doing something special for their clients, and ultimately those managers use industry speak to justify charging a higher management fee.
