How the Media Sets a Dangerous Tone
On Wednesday at 2:20, we read the lead articles on CNBC.com, looking for the first three mentions of the word “investor”. Here’s what we found:
“…Investors have been fascinated with the rise of the 10-year Treasury yield…”
“…Investors want clear and optimistic forecasts for the rest of this year from companies…”
“…Bitcoin presents an appealing alternative for investors selling on macro-economic news this week…”
Do you see the problem? The longer you’ve been a client, the more likely it is you do.
Here, we help investors. They have a long-term outlook, and know, on some level, that what happens today, tomorrow, next month, or even next year is irrelevant to the success of investing. Investors change course only due to life events, like divorce and retirement, or because it’s time to spend the money.
No investor cares about the yield, or company forecasts. And no investor sells on news this week (which assumes they buy back the week after?). And certainly not to buy bitcoin!
Who does? Speculators do. (a.k.a. “Short-term investors”)
It’s OK to speculate…as long as you know you are speculating, and more importantly, that it’s unlikely to work. Decades of data, evidence and research show that speculation is a loser’s game. Some will get lucky, and then make the mistake of believing it was skill. At its best, speculating is fun, like a trip to the casino. At its worst, it ruins lives. Just ask anyone who put their life savings in Enron or Sears.
They say the longer you tell yourself a lie, the more you’ll think it’s true. The media’s been lying about speculators for decades. Let’s hope the speculators themselves know the truth, so they can adjust their expectations for success – or lack thereof.
And some advice: don’t read or watch the financial media. Your portfolio will thank you for it.
Cheers,
John & Bill