Thursday, January 8, 2015

Stock Market Noise and B-S.

It took me a few days to finally decide on my New Years Financial Resolution for 2015.

Just one, its pretty simple – “Avoid listening/reacting to all the Noise and BullS$@t.”

Jan 9th and the market is in an uptrend, booming strongly again, despite fears just days before in the media of the Greek Exit from the Euro (Grexit - stupid catchcry legitimizing media name for something that hasn’t ever happened), more of Putin’s games, unrest in the USA, Oil up or down a dollar today,  etc etc.

It doesn’t really matter if you think that the market is manipulated or not, but its very easy to believe that retail investors are heavily manipulated. 

“They”, whoever “they” are, those men in dark suits, the Fed, Politicians, Wall Street etc, have that mastered to an art form.  Washington DC and most political centers around the globe operate on a 24-hour news cycle.  That keeps the public listening to what the politicians have to say about how great they are doing.  It is of course no different in finance and the markets.

Short news cycles keep the investor herd running from side to side in a state of flurry, boosting commissions to Wall Street, and destroying investor long term trades, allowing Investment Professionals to keep all the bigger gains.

Buying where you think it’s low, and selling where you think it’s high, or at fear of going lower – essentially buying wrong and selling wrong.  Simple.

How can investors avoid this trap of Masterful Psychological Manipulation?

First, is refuse to participate.  If you are not a deliberate day trader, watching CNBC or Bloomberg is really not going to help, unless you have the discipline to not make ANY trade decision on what you see or hear.  Better to leave it off.

Second, is to not make a trade based on a stock pick.  If it’s on telly – it’s too late more often than not.

Thirdly, and I think most importantly – There seems to be long-term macroeconomic shifts at play.  These are the trades to make.  A strenghtening US dollar, the coming of increased interest rates, a stronger US economy, weaker emerging markets, and even longer term is a recovery In Europe.  None of these are affected in the long term by whatever they decide to sell you in the media today.

Remember the media’s only job is to get you to watch and read regularly, to view or click on the ads that appear – not provide ANY sound advice.  Even worse than that is that it can become addictive!  So well are we conditioned and targeted towards emotional responses, cultivating a fear of missing out (FOMO) need to continue watching even if it is to our disadvantage.

“Its just noise and B-S.”

“What’s just noise?”

“It ALL is.  Except for the part that is B-S!”

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