Stock Market Cheerleaders / by kevin murray

Monday through Friday the stock market is open and it's covered before the bell, during the trading hours, and after the bell by television organizations like Fox, CNBC, and Bloomberg, along with numerous online websites.  The overriding sentiment, no matter what is going on in the real world, is one of bullishness.  Of course, I want to be realistic here, the pundits are never 100% bullish, but that is the overall sentiment.  The message that these media outlets typically want to send out is that stocks and your investments in general, are only going to go up, up, up.  Further, that even if your stocks should go down, why that is just another buying point for your selections and they will still go up if you just have the courage to hang on, think of the long long term, or to purchase more at this new bargain basement price.  While this all looks and sounds great, especially when the stock market in general is going up, the fact of the matter is, sometimes the market goes down and it can go down by a lot.  In those types of situations, the pundits muddle through it, try to justify or unjustify it, try to explain it, pontificate, bluster, but it isn't quite business as usual.


Through it all, do these media outlets actually care or are they concerned about how you the individual investor performs?  Actually, I do believe that they do care and that any legitimate organization is trying to give you good and often sound advice.  The problems are that their track records may be rather poor, past history is not a guarantee of future success, and the hot hand of last quarter or last year by the time he or she becomes a name, is often having a poor year or a reduction to mean, when you unfortunately hear about them.  Their intentions may be good, the articles may be informative, but it doesn't necessarily add up to investment success.


The stock market cheerleaders also want to get you excited about the market, to trade with the market, to get in, to get out, or to just get involved somehow.  In order for the market to move, it needs action, for every buyer there has to be a seller.  The cheerleaders want to give you the illusion that you too can make that easy money, that it's only a click away, and that if you compound some daily gain over a weekly period and then compound it again and again, you'll be filthy rich.  They don't bother with telling you these important and fundamental facts, that you are an amateur up against professionals, quants, high-frequency traders, and insiders.  Do you really think or have the audacity to believe that you are the smartest guy in the room?


Before investing in the stock market, you should be aware of what you do and don't know.  You are not a congressman or legislator, or lobbyist, discussing pertinent legislative laws which will have a material impact on your business.  You are not a corporate insider well aware of whether your company is or isn't going to make its quarterly goals and well aware of the pipeline of future sales.  You are not part of the Federal Reserve and consequently do not know ahead of time, future Fed policies.  If this is who you are not, you are on the outside looking in.