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In today’s 24/7 news cycle, business media has become a perpetual carousel of one alleged financial investment guru after the next.
In her book, ‘Pound Foolish: Exposing the Dark Side of the Personal Finance Industry,’ Helaine Olen cites a Univ. of California study that discovered anytime a stock was pointed out by name on CNBC, its price right away enhanced– whether the information was positive or unfavorable.
This isn’t a trend we need to be thrilled about.
For starters, if a guy sitting in front of a half lots cameras on nationwide TELEVISION is acclaiming stock insight, one thing is for sure: You are not the only one listening.
The minute an idea comes out of their mouths, it’s old news that’s been heard by thousands if not millions of other investors and, as a result, has actually already lost whatever minor edge it could’ve given you.
“Although individual investors are net purchasers of attention-grabbing stocks-stocks that are in the information or that experience uncommon one-day returns or trading volumes-these stocks subsequently don’t perform as well as the stocks that the exact same investors determined to sell,’ the SEC stated in its research ‘Behavioral Patterns and Pitfalls of U.S. Investors.
Your best bet?
Treat speaking market gurus like the ad-selling performers they’re indicated to be, and take their suggestions with a big dosage of salt. Maintain a correctly diversified portfolio (ex: a mix of stocks, bonds, cash, and real estate that must be recalibrated according to your threat tolerance as you age) that’ll weather whatever storm might come, and you’ll be all the better for it.