Monday, March 3, 2014

Let's talk about Financial News

If investment writing was a sport, Let's Talk Investing wouldn't be called full-contact.  

It's probably not even a non-contact sport.

Let's Talk Investment might have a place in the world of the investment writing sport like a particularly dispassionate commentator.

"...and in other news... ah f%&k it."

Here are a selection of places you might go to locate Serious Financial News:
- Business Insider
- MSN Money / Google Finance / Yahoo Finance 
- Seeking Alpha
- Fark

Consider the above an earnest offering to those people who feel like reading full-contact financial news: company reports, earnings updates, and commentary on why the market is doing what it's doing.

Or in what specific way that it's going to hell.

I do read financial news, I actually find it fascinating.

Because I am interested in the stock market, I often read financial news articles.  These are painstakingly picked for me by Google, through the Google Finance homepage.  This is how I track all of my stocks, carefully not thinking about how creepy it is that Google knows my financial information

There is a trick to reading financial news, and that trick is not to care at all about what you read.

"The trade gap widened"
"Unemployment is down."
"Foreclosures are up."
"Rich people continue to be rich, proof proves."

Good financial news I read like a happy investor, pleased that I made perfect decisions (obviously) on shares that I bought.

Bad financial news I read like an eager heiress might read the obituaries page, looking for news of the ill health of some particularly wealthy relative.  Bad financial news piques my interest, makes my investing fingers twitchy.  This makes me a value investor, a term I much prefer to @sshole.

The odd news article does make me sad... I'm not a total monster.

"Established company crushed by the winds of change, shuts down."
"Large city becomes ghost town due to mass layoffs."
"Puppy factory burns down."

The best, most fun financial news news have great headlines, give people a lot of good or bad feelings and tells the average person absolutely nothing about the stock market.  I submit for your review this little gem:

I read this when it was posted in early January.  The author of the article above gives a number of logical reasons as to why the stock market will "top" soon.  

In our Wellington Letter we have pointed out a number of these indications that a market top is somewhere in the not-so-distant future.
A market top??? What does that look like?

What a market top might look like.

When finally the evidence says that perhaps the (fiscal) environment isn’t as great as thought, the selling starts. But money managers can’t buy more stocks at lower prices because they are already fully invested. Therefore, the decline continues, the selling accelerates, the bad news items become more frequent. And that is how bear markets start.

On the 22nd of January 2014, 16 days after the article was released, a lot of stocks did an abrupt about-face in their prices.  By February 3rd, the Dow Jones Industrial average had fallen by 6% (from 16500 to 15500).  At the time of writing it's risen significantly, almost back to where it started.  So... is that it?  Are we done now?

It doesn’t necessarily predict a top this week, or next or even next month. But it does say that the market is very vulnerable.

This is a cop-out.  Of course the market will crash at some point, it always does.  But what about my pressing questions as to when I should buy stocks?  

Or when I need to build the concrete bunker to prepare for the financial apocalypse???

Our other advanced technical indicators will give us the specific timing. Over the past 36 years, they have allowed us to predict every bear market and often calling the market top within a day or two. 

They're saying that they know the answer, but they don't want to tell it to you.

"Nyeah nyeah." -- Forbes

For one thing, the author is trying to sell you the information, he doesn't want to give it away for free.  (Capitalism!)

The other reason is more subtle.  Suppose I revealed that I absolutely knew that the stock market would be crushed on 21 March 2014 at 12:34 AM.  (You heard it here first, folks).  If you owned stocks, what would you do?

It could go one of two ways.  The long term investor would casually shrug their shoulders and move on with their lives.  They'd rustle up some cash to be ready for 21 March to buy more stocks at bargain basement prices.

The short term investor (supposing they believed my prophecy) would probably start selling parts or all of their portfolios to "lock in" their gains before the fall.

But there's a complication: if enough people believe my predictions, no one wants to buy the stocks that the short term investors are trying to sell, at least not before 21 March.  It's stupid; they know that they will lose money buying now.

If everyone believed my prophecy, it would actually be wrong.  The market would crash today.

Wait... no... not YET!!!

As a result, stock market news has to be carefully vague.  The more trustworthy the publication, the more likely that definitive statements will be proven wrong.  It's a weird quantum public perception/belief/actions vortex that makes my mind hurt.

I read financial news like I read tabloid magazines.  Come for the drama, stay for the vague informative statements that are probably wrong.


(Just to let you know, there's no financial incentive for me if you click on any of the links.  They're just links.  No one paid me to post them, either.)


You must realize that "Let's Talk Investing" is not authored by a financial planner, adviser, or a professional investor in any capacity. As such, this is not expert advice in legal, taxation, financial, or any type of information that may be provided. The reader must realize this when reading these articles and must not rely on them as the ultimate source of information but must seek proper verification from the appropriate professionals before acting on any of this information.

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