As I'm whistling past the graveyard with my short positions, the market continues to rally. I remind myself that you should never invest more than you can afford to lose, but right now I've lost nothing because I haven't sold anything although I'm taking a whopping paper loss. It is with absolute certainty that I doubt myself every day, yet I still forge on with my convictions of a double dip recession. I know it's touch and go for the next month or two if history is any indicator because the market tends to rally in November and December. Right now there are two divided camps on Wall Street on where the market is heading untill New Year's Eve. The bulls believe that mutual fund managers and retail investors will continue to chase momentum forcing the market higher. The bears think that money mangers will start to sell stocks to lock in their yearly profits and the market will correct. How do I know all of this? By watching CNBC.
Financial networks like Bloomberg, CNBC and the fledgling Fox Business News are a relatively new phenomenon for both the individual and institutional investor. CNBC came of age only 20 years ago with the advent of the national cable television build-up. Before the birth of CNBC, you'd get your business news the day after in print from newspapers like The Wall Street Journal. Now information is absorbed instantaneously as it hits the airwaves and the Internet. I am not implying that it levels the playing field because the institutional investors still have the inside track with the Old Boy Network, but it does help.
I'm a stock junkie. I watch CNBC all day, but don't recommend it for most retail investors. A majority of financial experts agree that for your Average Joe on the street, you should check your portfolio once a month or once a quarter and re balance if need be. Watching the vicious swings in the market makes you apt to trade more frequently especially as guests on the financial networks discuss the minutia of a one point move either up or down for a security. Trading more frequently makes you lose money which is why women tend to be better investors than men - they trade less often. Watching networks like CNBC can make you trigger happy if you are near a computer and have an on-line account with a brokerage firm. It is too easy to trade, particularly when you are inundated with "experts" jawboning about the virtues of a stock that may or may not be a good value. Rarely do I get a stock tip I can bank on from watching CNBC, but I do get plenty of economic news.
It has been said that astrology was invented to give credibility to economics. Take a piece of economic data, give it to 30 economists and you'll come up with 30 different interpretations. This is proven time and time again on CNBC where nobody agrees on anything. It is great for an open discourse, you will get both sides of the story, but who is right and what advice should you follow? This is the hard part. The power of persuasion by some of these economic alpha dogs is second to none whether they are right or wrong or what track record they have. I still watch CNBC because you do get valuable information, but you have to know how to parse it. That is why I believe you should get most of your economic information through reading. Any financial portal on the Internet will do.