The news is useless as an advisory on risks and opportunities
If you are an investor who is trying to figure out where and when to invest, you could be forgiven for believing that the news is important.india Updated: Mar 14, 2010 21:53 IST
If you are an investor who is trying to figure out where and when to invest, you could be forgiven for believing that the news is important. The entire financial media is dedicated to bringing you up-to-the-minute accounts of everything that is happening in the world that could affect your investments. At least, that’s what they (we?) would like you to believe. Look at the intense media coverage of the Union Budget.
But the budget is just one event in the year, there’s always something or the other going on. Credit policy, corporate results, product launches, management changes, price cuts —there’s no shortage of events with importance real or hyped that a careful investor is supposed to be aware of. The message of the media is, any or all of these could affect your money.
However, this is not true. Monitoring the news is not important to how well or how badly you will manage your financial investments. I’m not saying that the news is not important or that what is happening will not have any affect. What I’m saying is that the collective message of the financial media is that it’s important to stay continuously informed and by implication, it is important to react immediately to whatever is happening. This is wrong. It’s not only wrong but it’s positively misleading and harmful.
The implicit message is that short-term events matter to all investors, and if you are an investor you must be clued in to the news minute-to-minute and be prepared to react at a moment’s notice.
Nothing could be farther from the truth. A lot of people mail me asking for investment advice and solutions to their investment problems and I’ve always seen that most problems arise out of things that someone did or didn’t do over months and years. Fixing those problems also involves taking actions that need to be sustained over months and years. One never comes across an individual whose investments, when seen holistically, have done badly because he or she didn’t keep track and react to events. In fact, there are plenty of people who have done badly because they react to often and too quickly to events, even before the real meaning of those events has become clear.
Don’t let the ceaseless hype in the business media fool you-the news is a commercial product and exists to make money for the media. Taking care of your money is about careful thought and measured action.