Quick! Sell it all!

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“Sell everything and buy gold!”

“Time to take profits off the table!”

“The market is poised for a big upswing – get in now!”

“Make 16% guaranteed with tax lien certificates!”

“Buy my real estate flipping system and control your own rental empire!”

 

I’m getting an Excedrin headache.

If you’re like many people, reading the financial news every day can make you crazy.  Yet you continue to watch in order to stay informed. You want to be in the know about financial markets so you follow CNBC, Money Magazine, The Wall Street Journal, The New York Times, and others. Some outlets are better than others. There is so much economic uncertainty in the air, so you invest time and energy reading, or listening, to these “experts” to get a sense of what you need to do with your money.

We believe the best client is an educated client. But if you want to become more knowledgeable about financial markets, you need to be skeptical about the majority of what the talking heads are saying on TV and mind the source. Here are three things to keep in mind as you filter through the financial headlines:

  1. News organizations are in the business of making money, just like anyone else. Sensationalism, disguised as news, sells. Keep in mind who the bosses of these TV hosts and writers are. It’s not you. More often than not, economic trends are digested and interpreted in a way that will get viewers and readers to pay attention a little longer.
  2. Opinions differ wildly. You know this to be true. On Tuesday, TV personality Jim Cramer exhorts CNBC viewers to sell out of stocks within a particular industry. The next morning you read an opposing opinion in the Miami Herald that companies in that same industry have great “upside” potential. The perspectives you hear are often contradictory. There is a lot of garbage out there, and people make costly financial decisions by succumbing to their fears.
  3. Various economic perspectives in the media may be accurate in their reporting, but have little to no bearing on your personal financial plan. This is perhaps the most crucial point. Today, there are more perspectives than ever. And with the rise of social media, the potential audience for these “experts” can grow exponentially. These are usually distractions that may tempt you to alter what you know to be a strong and fundamentally sound course for you and your family.

If it is being reported, then markets already know about it and have factored it in.  People who make a living trading in a certain industry – mutual fund managers, as an example – have their ears to the ground and know what’s going on long before you do.  They’ve already traded on that information.

We appreciate a knowledgeable client. Our most knowledgeable clients ask a lot of questions – not just to us, but to their attorneys and accountants as well. It is impossible to know everything about financial markets, and it’s as much art as it is science to interpret what current economic trends mean. Thankfully, all you need to know is your own bottom line – “What does this mean for me?” That’s where your trusted advisers some in. Leverage their knowledge, don’t get distracted by the hot air in the news, and keep a cool head while sticking with your financial plan.

Jonathan Cameron, CFP®

Jonathan is an Investment Adviser Representative at CameronDowning. For a complimentary initial consultation, visit www.cameron-downing.com.

Photo credit:

Photo: Markus Spiske / raumrot.com

 

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