Each business day the financial media feverishly promotes the reasons for the up or down movement of the popular stock market averages. It is human nature to look for the cause and the effect of both good news and bad news.
The financial media can’t help themselves. Each day they absolutely have to explain why they think the stock markets went up or went down. That is why they call them “talking heads,” right?
The daily fascination of the direction of the popular stock market average reminds me of when the Vikings play a football game. All week long the media talks about every possible reason, statistic, and opinion on why the Vikings won or lost their last football game.
I have been watching Vikings games for over 45 years. The reason the Vikings lose their last football game was that the other team scored more points. If the Vikings score more points, they win every football game that they play.
Points in football games are the same as prices in the stock market.
The price of a stock is where the seller of the stock and the buyer of the stock meet. At the end of each trading day, the price of a stock is the only thing that matters.
The Federal Reserve, President Obama, and the direction of interest rates are all relevant financial news. But a stock moves up or down because of the price.
If there are more sellers than buyers of a stock, the price will go down. If there are more buyers than sellers of a stock, the price will go up.
The financial media has it all wrong. The only thing that matters is the price of the stocks that you own. Everything else is just financial entertainment.
Ric Lager
Lager & Company, Inc.
