Make the Media Work for You

“News is to the mind what sugar is to the body.” – Rolf Dobelli

We live in a world of news and media. We are constantly bombarded by headlines, articles, stories and breaking news updates. The media encourages us to fixate on one issue from so many angles that we tend to get dizzy and lose sight of the main point. And when the going gets tough…the media gets ugly!

Take for example, the Apple earnings release from the fourth quarter of 2012. According to Apple, their Q4 results were aligned with their company’s expectations. However, according to what “Wall Street Analysts” were expecting, Apple’s revenue fell short by $2 billion in the last quarter of 2012. This led to countless headlines questioning Apple’s products and their ability to sustain dominance in the mobile device market. As a result, Apple shares fell 12.5% in one day.

Did their business change? No. Did their devices change? No. Did their corporate structure, strategy, leadership, or competitors change? No, no, no and no.

Then what did change?—Headlines!

Now this is just one example the effect news media can have on investors. Any one story can be twisted to instill fear and doubt in the minds of millions!

The quote above is by a Swiss author from his article called, “Avoid News,” which essentially describes news as manipulative, inhibiting, costly, and irrelevant. Now I’m not saying every story out there is “toxic” and to absorb news is detrimental, but there is value in limiting news “intake” and understanding what should  and should not be absorbed.

So next time the news is on, remember these points:

If a little is good, a lot isn’t better

In everyday life, constant intake of news is overwhelming. In the financial markets, over-saturation of news often leads investors in and out of the markets, usually at the wrong times. We find there is so much noise that it can cause investors’ confidence to diminish, leading them to stray from their investment plan. So when it come absorbing news, try to take smaller bites.

Dig for the facts

The truth isn’t in a 2 page article or a 30-second story. Those headlines are littered with the buzzwords to grab readers and stop channel surfers. To find the facts requires a little digging. Don’t read what’s topical today. Research the topic and increase your understanding. Gather enough facts to form your own opinion. Loud headlines inhibit independent thinking. Instead, try reading books or journals.

Look past the present

News is stagnant. Think about it; most reports are out of date days or even hours after they’re published. People want to know what’s happening now, even though it will be “old news” tomorrow. Don’t let today’s news impact tomorrow’s behavior. Instead, read with a long-term perspective in mind,  and understand that the lasting facts don’t change because the paper is off the press.

As advisors we try to filter out what’s important and not important. We spend our time reading, researching, and filtering through analysis to find the long-standing facts that are appropriate to each individual and their specific plan. Because when the world gets noisy and news-y, we want to provide the clarity and confidence that keeps your plan on the right track.