I found this amusing article on Bloomberg Business the other day. It talks about how companies whose CEOs have grabbed a spot of tea and lunch with President Obama have seen their stocks outperform the S&P 500. If you take a look at the chart below, the results are pretty solid. I guess CEOs should be lining up to power lunch with the guy.
But seriously, this is just another example of how the media loves to overanalyze things. The media loves to make connections between things that are completely unrelated and just happen to occur by mere coincidence. This is pretty much the same thing as when baseball announcers alert you to some obscure statistic - like no other catcher has ever hit a double and a triple in back to back at bats on consecutive days (I just made that up but you get the point). It's perhaps interesting to know that Obama's picking winners to luncheon with, but it's nothing to base any investing or trading decisions from.
The reason why a story like this was even written was because the media has one mission - to entertain you. They are not there to provide you useful information to base your decisions upon. They are there to sell newspapers, and online subscriptions, and to get viewers to their articles so that you can be exposed to their advertising.
This is perhaps most true about the financial media. All day long on Bloomberg, CNBC, Fox Business, or whatever media source you desire, you are bombarded by a series of people presenting a million different viewpoints, recommendations, and conflicting positions. If you listen to them all, you'll get completely paralyzed and never actually do anything - they all seem to counteract each other.
On the contrary, what you need to do is to develop a system that hinges not on the conflicting recommendations of a bunch of media pundits, but on what actually matters - the movement of the stock price. Only this kind of system can be backtested throughout the past and be proven to succeed time and time again.
No comments:
Post a Comment