Don’t Invest Based Upon the Financial Press

Don’t Invest Based Upon the Financial Press by Jeff Holland{Read in 1:30 minutes} While informative and knowledgeable, the financial press is backward-looking rather than forward-looking, which means it has no predictive value for the future.

Journalists do a great job of describing what has already happened, but that’s known information, and as they say, hindsight is 20/20. Journalists can’t describe what will happen; it’s not their job to prognosticate the future. They make opinions about trends, but those opinions are not meaningful when it comes to managing portfolios.

Journalists are not accountable to the clients. They don’t see us as the fiduciaries that we are. They are in the business of selling ad space, so they need to hook readers and viewers. They have to say provocative things to maintain their audience and, thus, the advertisers who keep them in business.

They like to bring in guest experts who make myriads of predictions. They try to provoke strong emotional responses like fear. But investing is not about emotion. It’s about rational response and planning of goals.

It’s fine to listen to analysis of what happened in the past, but we must not act when they start making market predictions. The only thing that moves markets is future unknown news. Know that the financial press may be interesting and/or entertaining, but invest according to financial science.

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Jeff Holland

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