Stop Listening To The Media

No really.  Please.  Stop it.

 The media is TERRIBLE at choosing stocks or even predicting the market (a serious consideration to those of you who want to or even think they can time the market).  Let’s look at a bunch of notable examples:

10 Stocks to Last the Decade by Fortune Magazine
“Who’s positioned best?  As we see it, four companies: Nokia, Nortel Networks, Enron, and Oracle.”
“Our picks in [entertainment] include Broadcom, Viacom, and Univision.”
“Wall Street… we think it’s Charles Schwab… the second major leg in finanical services, globalization, is Morgan Stanley Dean Witter.”
“…the strongest is Genetech”

The Motley Fool recently reported on this article in 10 Stocks to Last the Decade, Revisited and has some good commentary about reasons these looked so good at the time.

BusinessWeek ran an article titled “Sorry Steve, Here’s Why Apple Stores Won’t Work.”  I actually saved this article.  TheStreet.com added  “I give [Apple] two years before they’re turning out the lights on a very painful and expensive mistake.”  Oops. 

Or to take a more recent spin on things…
Forbes: “Merrill is in damn good shape.”
BusinessWeek: “Don’t Be Leery Of Lehman”

You would have thought Fortune would have learned from the above debacle right?  Hah!

10 Stocks to Buy Now by Fortune Magazine has AIG on the front page of the article… so obviously no learning going on here.

The Best Stocks for 2008 by Fortune Magazine has Merril Lynch on the list.  Oops.

Oh, Fortune apologized for the picks, but the long term reality is that these magazines (or corresponding cable shows) are never held accountable for their choices.  There is no real justification for their picks.  They have veiled arguments and reasons, but no true justification.  When they’re wrong they come on and say, “Well, we couldn’t have seen this coming.”  Enron was lying.  No one knew how bad these mortgage backed securities were.  No one knew this or that.

Ever wonder why they’re picking stocks any Joe could read in a $4.95 magazine and not managing a fund?  I’ll believe an analyst that puts their money where their mouth is.  Show me your portfolio and then I’ll listen.  The bottom line?  BUY AND FREAKING HOLD!

Most of us, dear readers, are kidlets still and have plenty of time to ride through this.  If you’re nearing retirement, I’m sincerely sorry - looks like 3-7 more years of work for you just to get back to January 1, 2008 numbers.  Your investments probably look like mine right now - shit.  In the LONG TERM - and that’s the game we’re playing here kiddies - all past history and contemporary knowledge says the market cycles, rebounds and eventually gains.

Oh and while we’re at it… the idiot in your office procaliming how OBVIOUS this problem was and how EVERYONE saw it coming.  Ask him/her two questions: “How have you changed your investments to reflect the economy?”  and “What did you do in advance to protect yourself from this slide?”  Each question is guaranteed to leave your annoying, idiot buddy sputtering. 

We took a terrible slide yesterday.  Today it could slide more, or rebound, or hold.  We simply don’t know.  The market simply reacts.  One day’s actions do not necessarilly mean anything.

Yesterday:
Stocks tumble as bailout plan fails in House
Stocks Fall Precipitously After Bailout Bill Defeat
Blue chips plummet below the 5000 barrier
Asian stocks dive as panic sweeps global markets

Today:
Stocks bouncing back
Stocks Build Back in Rebound Rally
Dollar gains ground
Stocks at Session Highs Midday
Stocks Seeing Further Upside Going Into Afternoon Trading

Conclusion?  Don’t listen to the headlines or even the people that THINK they know what they’re talking about.  They don’t.  No one knows.  Worry about the things YOU can control in your own life.