Many invest based on the daily news, a nutty method that never works. TV news readers — readers because there do not seem to be many real journalists working these days — as in the genuine articles being the men and women who, like Dragnet's Sergeant Joe Friday, gave us the facts, ma'am; just the facts. It wasn't so many years ago that the Who, Why, What, Where and When of journalism were reported without much bias. But now we get handsome or beautiful TV news readers, people paid huge salaries (yes, the same folks who report on the exorbitant salaries in corporate America command huge agent-driven pay themselves) seem to tell us every minute of the day that the end of the financial world is right around the corner. Print journalists are no better than their television and radio counterparts, except they mostly can't command the same high salaries. All of these men and women seem to, by expression and attitude, tell us how to think about finance and investing. We believe them and think the end of the world is coming, and we sell our stocks, buy bonds or something worse, and then sulk. Or we believe the talking heads when they say times are good, and invest for the wrong reasons.
Bias or not, The Daily Blather is not good for our investing health.
The business of media is based on eyeballs and ears. CBS, MSNBC, Fox Business make money based on how many eyeballs and ears are watching or listening. The readers don't earn high salaries without coming up with new important information, so that millions of us are hooked on the news and pay attention each day.
Investing journalism
The real business of investing is covered well by a different type of media. Good investing information is invaluable — the currency of the occupation — and some publications (Barron's comes to mind; also The Wall Street Journal, the business sections of many local and national papers, Kiplinger's, and several trade publications) excel at providing good, sound information. Such publications are less prone to over-excitement about The Daily Blather. While these publications may note things of national import, their real focus is on investing.
Investing is a reflective pursuit, one that requires time and study. Decisions can be fast, but prep time is slow. If you are in the business of advising or planning and you don't want to put in the time to develop expertise in the investing craft, for Pete's sake, get engaged with two or three good mutual fund wholesalers and a separately-managed account (SMA) manager or two.
Another alternative: If you are great at attracting customers and building assets under management, hire or partner with someone that has a talent for portfolio work or for selecting and working with great SMA managers.
If you don't like the idea of partnering, find two outstanding fund wholesalers from two of the best fund companies and work exclusively with them. Or work with SMA managers yourself. There are other alternatives as well. Many advisors work with The Sherman Sheet (phone Gordon Case at 888-957-3438), or Dynamic Portfolio Strategies (phone Charlie or Kate White at 877-377-7872). They provide trading signals and you do the gathering of assets while they do the investment strategies.
When using such strategies, it may be better when signals are fairly frequent, to use relatively large brokerage or advisory accounts to minimize the effects of ticket charges and/or commissions. The signals work well, regardless of account size, in certain variable annuities designed with trading in mind.
