Stock News

Common investor mistake: Following the advice of pundits

The TV may not be the best way  to lean about investing.

The TV may not be the best way to lean about investing.

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 correct about only two-thirds of their predictions. A CXO Advisory Grpup 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 investment management software. Explore SmartStops' website to learn more. 

Categories: Stock News

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