A healthy dose of skepticism
Financial news can be fraught with superflous news that seeks to explain random events, Brown argues. Savvy investors should read everything with skepticism and remember to pay attention to historical context when they're trying to analyze what the market is doing.
Financial news can be fraught with superflous news that seeks to explain random events, Brown argues. Savvy investors should read everything with skepticism and remember to pay attention to historical context when they're trying to analyze what the market is doing.
Morgan Housel (Motley Fool) does an excellent job here reminding us of how much superfluous news is created each day:
What he doesn't mention is that the reason financial journalists and media producers do this is because its what people think they want. They see the market go up or down or both in the course of the day and they want an explanation for it that is logical enough to satisfy the part of their brain that searches for answers.
And the media is happy to give this to them because ads can be run alongside it.
If investors weren't constantly in search of explanations, this wouldn't go on and on the way it does. But they are so it continues. Your job is to be aware that fluctuations do not require ex post facto answers and to take the whole shooting match with a big helping of skepticism.