How many times have you almost bumped into a person walking towards you who had their head down on their cell phone? The reason was that you had your head down looking at your cell phone as well.
With the access to more financial news information that we could ever possibly read, how come individual investors have not improved their company 401(k) investment management decisions?
The reason is that financial news information is entertainment. It is no different than sports, talk shows, or TMZ. Financial news fills the air time and website space in order to sell commercials.
Financial news TV shows and web sites don’t have time to teach. The only have time to entertain viewers and readers between commercial breaks and pop up ads.
The current stock market volatility has more individual investors tuned into all mediums of financial news. Here is one basic investment management concept that you will never see or read there.
There are only two things that make stock prices move up or down. The first is more buyers than sellers. That makes the price of a stock go up.
The second is more sellers than buyers. That makes the price of a stock go down.
If you can read the price chart of a stock, you can have a very good idea on the direction of that stock. You don’t need your cell phone. You don’t need the internet. And you sure and hell don’t need to watch CNBC.
The price chart of a stock is the only news you need. When you can read the price chart of a universe of stocks (like the NYSE, NASDAQ, or S&P 500) you can determine the direction of that market of stocks.
Price comes first. The financial news media reaction to the price comes second. Your cell phone and internet connection comes last. That is the real time order of the stock market world.
The price chart of a stock will tell you what is happening right now. The price chart of a universe of stocks will tell you when the buyers or the sellers are winning.
You don’t need to act surprised when you get your March 31st company 401(k) retirement plan statement in the mail this month. If you can read a stock price chart you would know that there are more sellers than buyers of stocks.
Ric Lager
Lager & Company, Inc.
