Whatever you think you know about investing, forget it. The vast majority of the beliefs held by most individual investors come from the daily diet of misinformation handed down by the financial press. From CNBC to Money Magazine to Barron's, it's almost all completely worthless.
Have you ever noticed that all of this drivel is contradictory? That one talking head on Squawk Box says one thing and five minutes later another one says something completely different? The fact is, if they are attempting to forecast the future, neither of them have a clue.
When you examine the track record of those who attempt to predict the future, you find that it is universally abysmal. The best manage to get it right just over 50% of the time - very slightly better than what you'd expect from random chance. In fact, since the stock market goes up more often than it goes down, simply predicting "up" every time will put you at the top of the pack. Yet, everyone tunes in to see what these people have to say. Are you starting to see the disconnect here?
What are the television networks and magazine publishers really trying to do? Are they trying to help you with your investment decisions? No. They are trying to garner ratings or sell magazines. Do you think that they would sell many magazines if, each month, they stated the truth and said that no one can reliably predict where the market is headed and that buying and holding a properly diversified portfolio that's designed for your risk tolerance and capacity is the thing that works best? It's a pretty safe bet that after a couple of months they wouldn't be selling magazines or advertising. Then what would they do? Go get a real job? That's no fun.
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