Do Investors Need News?

In this video, I’ll consider whether investors should see any difference between fake news and useless news.

Since Donald Trump was elected, there’s been an obsession with fake news. This story from Politico shows Facebook in the fray:

[Story shown in the video, at 0:25.]

Factually incorrect news is obviously useless, but what about factually correct and still useless news? For investors, this type has been damaging for longer and remains so.

A pundit’s honestly held belief about the future of markets is not fake, but it is useless because it’s unreliable. Ditto information about, say, interest rates or the price of oil or another war.

These are unhelpful for purposes of portfolio management because you don’t know the impact of the news, if any.

Consider this May 19, 2016 installment from The Economist’s Free Exchange blog:

[Story shown in the video, at 2:06.]

What shall we do? Sell stocks to avoid higher rates? It doesn’t seem good, what with the “ruins summer” quip.

Yet, here’s the Huffington Post on June 15, 2016, just one month later:

[Story shown in the video, at 3:40.]

There was nothing fake about reporting of the Federal Reserve’s key interest rate last May and June, but it was useless to investors.

You should not be guessing how to respond to news. You should run a proven portfolio system of price reaction only, like mine.

For rational investors, all news is pointless. We could say, “Don’t sweat the useless news, and it’s all useless!”


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