Should you listen to the news in the market?
Should you listen to the news in the market to decide what to do? Social media, TV, Internet… we are surrounded by so-called experts telling us what is going to happen next. The question is, is there any benefit in listening to them? Or should you be better off taking your own decisions?
There are three things to consider. First, nobody knows what is going to happen next. If they could, they would be rich already, don’t you think so? Second, most of the times you hear about news in the market when it is too late. This means that the information has probably already been factored in the price. Third, there may be conflicts of interests. For example, financial analysts may suggest holding shares a company despite financial issues because they are not allowed to say bad things about it. To get an idea, you can watch the movie “The big short” – the scene where Mark Baum spoke with a person working for Standard & Poor’s.
Hence, it is better to strictly follow your trading or investing plan, rather than being influenced by the opinions of people who may know as much as everyone else about the future of the market.
People who make their living looking into crystal balls are destined to eat a lot of broken glass (Larry Williams)