News You Lose!
If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re misinformed.
~(attributed to) Mark Twain
The news will never guide you to a good investment decision.
To the individual, the news can be helpful at times. News of an impending hurricane or a tornado sweeping across the country can be crucial information. Our world is very dynamic, and events being reported to us accurately, in real time, can be valuable to us.
At the same time, it’s essential that you understand the role played by the news media and how it appears to affect the markets. Generally, the news is about bad things happening and will serve to scare you to death. I have never heard of a successful stock market strategy based on the reporting of news.
Most often, the news media fail to recognize what the financial markets consistently foretell: that a change for the better is just ahead.
In order to see the change for the better happening, you’ll need to learn how to interpret a chart of the indexes, which is what real people are doing with real money on any given day. The news is based on what has happened. Financial markets move on what will happen. The advance in the financial markets has a peculiar way of stopping right about the time when everyone is really beginning to have confidence and the news is sounding promising.
All good things must come to an end, right?
The ascent of the major stock market indexes stops, turns south, and commences to decline. It never feels real at first. The news media begin to talk about all the reasons why it should be going down. After many weeks or months, the news continues to tell you exactly why you should be concerned. The market continues down, and the popular news of the day just keeps getting uglier and uglier. Somehow, every pundit on television has the answer for why the market is up or down on any given day.
You can just imagine what will happen next. The longer the market has been going down, the more likely it is that the news is getting worse and worse, seemingly justifying the market’s downward spiral. The news will constantly remind you about one cold, hard fact: You are getting killed in the stock market! Everything appears to be crumbling. Eventually, the news on television will tell you that the world is about to end:
Armageddon has arrived!
Several years back, Art Cashin—a very smart and colorful man on the floor of the New York Stock Exchange—had a great response to the carnage in the stock market. He said something to this effect: It won’t pay you to short the markets based on the end of the world coming because it will only happen once.
Even if you’re right, who’s going to care?
While the media are pounding you with all the reasons why the world is coming to an end, your Decision-Maker DNA is working to confirm what you are hearing and seeing. After taking a severe beating for many months, you are wearing thin. You may have sold out of the stock market altogether—right smack-dab at the bottom of The Triple Tank.
I hope not.
If you have, it shouldn’t happen to you anymore.
The worst of the news will not stop the stock market from finding bottom and beginning a whole new advance.
You must exit the market when the warning signs are there and come back after the bottom is reached in The Triple Tank. The Triple Tank is rock bottom.
Some may claim this sounds like bottom fishing. I strongly disagree. It is bottom catching. There is a big difference. If you’re like me, when you go fishing, you like catching fish.
The markets will get better, but the news often continues to remain desperate for many weeks, or even months, after the bottom has come. The news will promote doom and gloom, but the market will not wait for the news to get better and will leave you behind if you are waiting for the news to sound promising.
News, you lose.
A PROVEN METHOD
Now, we’re going to look at some charts of market troubles from years gone by. We’ll observe the news and discover why it will only serve to derail you in the stock market. The value of a proven method will become obvious.