Friday, November 6, 2009

How to Make Your Head Spin

Pathways Advisory Group, Inc.
David L. Williamson, CFP®

Want to make your head spin like poor Linda Blair in the movie The Exorcist? Easy, simply watch the cable financial news stations for an hour or so. The latest hot, breaking news comes fast and furious. The Dow shot up. Gold just fell. Unemployment jumps. Oil slips. Now for the analyses. Here’s Fred’s reaction. Shirley’s opinion. By all means, let Charlie weigh in. Quick – before the next news bulletin. And, just for fun, let’s have them all talk at once, shouting, screaming, butting in ad nauseam…

But wait, there must be a way to profit from all of this. “Here’s Jane with today’s stock tips. Jane, based on the last 17 minutes of news, and your vast knowledge of the universe, what sectors do you like? Any stocks looking good?”

And Jane, speaking with quiet confidence, eyes peering into the future, and a slightly furrowed brow, proceeds to enlighten us that because of A and B and a little bit of C, we obviously should grab Greezle and drop Dreezle.

Boy, they sure can sound confident can’t they?? We lunge for the phone to call our broker. But then, of course, Charlie weighs in once again (he’s a big guy), and bursts our bubble. Ernie shouts “Because of D, E, F, and Z, Jane should be hung in effigy.” Politeness somehow eludes them.

But what sells? What keeps us glued to our seats? It’s a noisy boxing match, folks. Punch. Jab. Counterpunch. Duck. Circle each other. Notice they always have a referee. Throw in some rumor, some humor, some darts, some charts. And don’t forget the percentages. We love those percentages…

What does it all boil down to? Prediction. If we can gather enough facts and views, numbers and news, we can foretell the future. Nirvana. Problem solved.

But not so fast. It’s all just noise. Daily market moves – noise. Hunches, guesses – noise. News, numbers, opinions, furrowed brows – noise. Over time, markets digest it all, far better than you or I, or any expert. Markets deliver reasonable return over time. Always have, always will.

Will Rogers said this about predictions. “It’s dangerous to make predictions, especially about the future.”

Sorry, Charlie. It’s time for you to weigh out. Let’s see what’s on HGTV.

2 comments:

Michael said...

Cleverly written :) This should be included in economic magazines and economic columns in newspapers and magazines like Time and Newsweek. Do you think they would publish something like this? I'd like to see them try!

Nancy

CurioRando said...

Your talkin my language! Rely on them? No. But for entertainment value: the only thing that's more entertaining is studio wrestling. The difference is you can learn a few of life's lessons watching Wrastlin'!