There’s nothing wrong with paying attention to financial news and commentary. If fact, staying abreast of market trends is a key part of actively managing your portfolio. The problem arises when you make decisions about your money based on what you’ve read or seen without doing any additional research.
You may notice that investing pundits, especially those with a television presence, always seem to be preaching a message of gloom and doom even when the market is doing well. Danger is always around the corner, seems to be their mantra. It’s important to remember that even though these analysts may in fact be experts in their field, their first motivation is to build their audiences. The use of scare tactics is more likely to attract more readers and viewers than a “just the facts” approach.
Several recent studies have shown that even the best analysts are correctin about only fifty percent of their predictions. A CXO Advisory Grp\oup analysis found that only 24 of the 68 individuals that it deemed “Investing Gurus” made accurate forecasts over half of the time. Jim Cramer, one of the most well-known pundits and host of CNBC’s “Mad Money,” had a 46.8 percent accuracy rating.
Few can deny that the antics of these market gurus are entertaining, but that’s all they’re offering – entertainment. To truly educate themselves, individual investors would be wise to read non-biased reports about companies that they are interested in, in addition to studying their long-term value trends. Another important component to consider is the use of an un-biased objective analytical driven toolset like SmartStops risk management services to ensure that you properly position size for your purchases to best manage risk. And use their Risk State Alerts to know when to step aside.