Financial News!

Last week, we discussed some upcoming changes in some of our clients' portfolios. We spend quite a bit of time and our researchers spend all of their working hours on the timing and selection of our investments. But this is only part of what we do.
A very large part of what we do for you is help you turn off the television, stop reading the internet posts, and ignore the naysayers in the newsletters.
I've attached an informative opinion piece from an influential friend of ours, Nick Murray. (Please email us for a copy of this article) Warning: this may offend you! I beseech your opinions here--good or bad--as to whether you ever want to read anything like this again. I promise, we are listening.
The less-biased summation of Mr. Murray's opinion letter follows, from yours truly.

First, the media promotes untruth daily. The news of the day does not cause the market to move. The news does not cause the market to move. The idea is completely false, yet we believe it! I have frequently been in the media, over many years, and I have felt compelled to feed the reporter's bias that the markets REACT when in fact, the actions of the market determine what news the media will feed us.

Let's look at an example: the media is given two bits of information in the morning, one good and one bad. Then the markets decrease throughout the day. The media ignores the "good" news and publishes the bad news as the cause. And what happens if the markets increase? Take a guess before you read on. 


The second point that Mr. Murray argues is that the news has a strong negative bias. If it bleeds, it leads. My insight into his opinion is that reporters are, by and large, good people who are exposed to a large number of bad experiences on a very frequent basis. The news profession itself may, actually, feed itself negativity in a vicious cycle. Very rarely have I found myself around a "naive" reporter or news person who is "optimistic" about her topic. Instead, cynicism abounds in many of the best and, indeed, is rewarded through investigative reporting awards, more advertising revenue, and book deals.  


To return to the story, the day begins with two bits of news, one good and one bad. If the market declines, the bad news, we are told, is the cause. If the market rises, then the headlines are likely to read "Market looks beyond the bad news" because if it bleeds, it leads.


The media is, after all, in business. Bad news sells and good news is, well, less interesting. So be careful when you engage with the media in hopes that you'll find some sort of reason for the actions of the market. The market makes the news and its actions are not "caused" by any except the most dramatic of news events.

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