Turn Off The News For a Minute…
Pretty much all big financial news networks follow the same pattern…
You have some endless ticker scrolling across the bottom of the screen while the pundits scream at each other. But they don’t ever seem to have actual methods to profit off what they’re all worked up about.
You want to know the truth? The sole mission of financial television isn’t to help you make money.
Instead, they’re there to keep you watching so they can sell ad space to the highest bidder.
Infotainment on CNBC, Bloomberg, and Fox Business is just big business attempting to raise the emotion to epic levels on even the most run-of-the-mill market developments.
I mean, think about it — when was the last time a TV contributor or guest gave you a real, actionable recommendation? You probably can’t remember, can you?
Instead, all we see are “breaking news” alerts to keep viewers engaged and fearful that they will miss crucial developments. But I get it… After all, the network needs your eyes glued to their advertisements in order to pay their bills. And bills don’t wait for real, exciting market stories to happen.
More often than not, the news is just noise that doesn’t have lasting effects on price. Unless the information is different than expectations, the impact on markets is minimal.
But the networks will ramp up every report as a can’t-miss event. Meanwhile, the talking heads push their book or opine about ideology. Rest assured, those positions and politics should have little impact on any individual investment decision.
So what’s the solution? Turn off the TV!
The strength to tune out the financial network noise is having the confidence to trust your intuition. An investor with a plan is not subject to the bulls, bears, dreamers or believers that are on our airways.
It’s always important to stay disciplined. Having the ability to block out the never-ending nonsense and noise from the magic picture box will only make you a better investor.
Keep it In the Money,
Trading Tip of the Day: Recognize Market Reactions
Last Thursday, stocks took a hit after Biden announced that his new tax proposal would have increased rates on capital gains.
Of course, The capital gains tantrum torpedoed stocks, and we saw about an hour of steady selling across the board. When the dust cleared, the averages were down about 1% on the day.
But this isn’t the end of the world for stocks, and I’ll explain why I think so…
For starters, if investors want to sell, they will find any excuse they can. No, I don’t think this tax proposal will crush markets in the long-term. Plus, it’s only just a proposal. I wouldn’t be surprised if they were just opening up with a big number that will eventually get negotiated lower.
Next, these new taxes won’t affect 99% of traders anyway (at least not directly). So I don’t think there’s much to worry about.
In fact, we saw stocks climb the very next day and erase most if not all losses from Thursday evening.
As far as I’m concerned, the news is nothing but typical market noise. The silver lining here is that we may get some good opportunities to buy up certain sold off stocks.
This also serves as a good lesson, the stock market is very reactionary. When news hits that investors don’t like, their first instinct is to sell. When the dust settles, the market usually does as well. After the gains on Friday, the stock market pretty much hit the reset button.
Bottom line: When news shakes the market, try not to let impulse dictate your decision making. It’s always better to evaluate with a clear mind.
– Greg Guenthner