Who do you trust?

[imoldernu]

Fire and Money...While I don't invest, I'm curious enough about what's going on in the current financial news.

Roaming around the financial pundits there seems to be enough variety of thought about the near time future of the market that it gets confusing. Breaking news every day, with gloom and doom facing off with giddy excitement. Daily fluctuations but most recently the market seems to be positive, likely following the positive economy I guess.

So, just this morning, floating around the headlines, two caught my eye... one about Russia divesting of 100 Billion in US treasuries... and another horror headline from banyan hill. Yikes! But the market hardly twitches.

Back to the question... Who do you trust? If I correctly read the temperature here on ER, investing is long term, and with trusted advisors. It's like... "don't worry about the day to day".... stay the course and trust. Not to make a killing, but not to lose one's shirt.

How do you handle a headline like "Armageddon... August 1"? My own inclination is to cash out my savings accounts and buy gold.

signed,

babe in the woods

 

[braumeister]

How do you handle a headline like "Armageddon... August 1"?

By ignoring it.

 

[MichaelB]

By ignoring it.

Or avoiding it completely. Remember this thread? http://www.early-retirement.org/for...o-actively-disengage-from-the-news-92578.html

 

[Jerry1]

By ignoring it.

Or avoiding it completely. Remember this thread? http://www.early-retirement.org/for...o-actively-disengage-from-the-news-92578.html

Agree. I’m naturally a pessimist (financially speaking only) and if I reacted to the news, I’d be broke because I would have focused on all the bad predictions and been more of a live for today person with my money, because why bother saving/investing when the bottom is going to drop out any day now.

 

[imoldernu]

Or avoiding it completely. Remember this thread? http://www.early-retirement.org/for...o-actively-disengage-from-the-news-92578.html

Yeah, Michael... and I know you're right, because of what we've seen. Still, I'm haunted by memories of a best friend who retired in 2007, with about $800K in investments. A scary thing when it went to $400K+ in a flash. Of course it recovered, and he was okay, but a heartstopper.

Here's the headline article that prompted the thought.

https://banyanhill.com/exclusives/70-stock-market-crash-to-strike-august-1-economist-warns/?z=977296

It all sounds so real... I've been watching bitcoin, and Netflix and Google... shocker headlines and fluctuations, and predictions. Good and bad.

Am thinking it really is time to up the Prozac and turn off the TV. Back to Woodhaven to work on the seawall, and maybe to up the 1 and 1/2 oz. four o'clock martini to 2 ounces. Prosit!!!

 

[ERD50]

Yeah, Michael... and I know you're right, because of what we've seen. Still, I'm haunted by memories of a best friend who retired in 2007, with about $800K in investments. A scary thing when it went to $400K+ in a flash. Of course it recovered, and he was okay, but a heartstopper. ...!

And reading financial 'advice' wouldn't have helped. That's why most of us ignore it.

You will always find 'advice' saying "GET OUT OF THE MARKET NOW!!!!!". If we followed that, we'd never have money in the market, and we wouldn't have the gains we have.

Ignore it. Not just to calm yourself, but also realizing it is of no help whatsoever. So you're not missing anything.

-ERD50

 

[Crabby Mike]

Print off that Banyan Hill article, so you can look at it on August 2, and then never again believe a hyped-up story like that.


I can look at CNBC every day and see at least one "expert" calling for an imminent crash, while another sees "Dow 40,000 by the end of the year" or whatever. I just try to average them out.

 

[38Chevy454]

I trust historical knowledge. While my crystal ball does not have the clarity to predict tops and bottoms of the market, it does have ability to let me know over long term it will work out in my favor if I stay invested and continue on my plan of AA and widely diversified investments.


I don't react to the various articles. As each day you can find the doom and gloom. I read some for perspective, but it's entertainment mostly.

 

[Chuckanut]

From the Banyon Hill article (emphasis added):

And when Bauman makes a prediction, he backs it up. True to form, in a new controversial video, Bauman uses over a dozen indisputable charts to prove his point that a 70% stock market crash is here.

Make a note of the name of the writer and the source of this article. If he's right (and you survive), the next time he says something, listen more closely. If he is wrong, make a note of how badly you were misled.

 

[OldShooter]

Dear babe,

Let me give you a couple of viewpoints that explain why most of us ignore the barrage of BS that is inflicted upon the unwary. I would also strongly recomment Nate Silver's book "the signal and the noise," particularly the chapter "How to drown in three feet of water" on the topic of economic forecasting. (If you are not interested in baseball, skip the first three chapters,)

OK, view #1:

Consider thousands of monkeys typing on keyboards and talking in videos, producing the random noise you have detected. These monkeys are slaving for web clicks, hawking advisory services, constantly trying to convince their bosses that they are a valuable monkey, or desperately trying to convince producers that they should be interviewed on-air. When something dramatic happens in the market it is inevitable that some of the monkeys will have predicted it. The most effective self-promoter among these will be crowned "genius monkey" and will stay on that perch until his subsequent failures of prediction become evident. During that time, other self-promoter monkeys are trying to claw their way onto the genius monkey pedestal. This goes on continuously. The statistics of random events also predicts that some monkeys will be right more than once. If you have 10,000 monkeys flipping coins eight times, approximately 40 of them will flip 8 heads in a row. There was a guy at Legg Mason named Bill Miller that filpped heads ten years in a row, consistently beating his benchmark and ascending to the genius monkey level. In the next two years he wiped out completely and lost more money for his investors that he had ever made for them. Statisticians have calculated the probability of one monkey, somewhere, doing this to be about 15%. Miller was the lucky monkey.
​

... and view #2:

Let us hypothesize that there actually is someone who knows how to reliably beat the market. Do you think that he or she would be stuffing themselves into a suit and commuting to an office building where the windows don't even open? To sell his/her expertise for a pittance to fund investors? To expose the secret sauce so that others can copy it? Of course not. He/she will be found on a tropical island sipping a drink from a glass garnished with an orchid. Every once in a while he/she will replenish the checkbook by making a few trades. The point, of course, is that if such an individual exists he or she will not be found in the cacophony of pundits or in the hordes of dark-suited fund managers desperately hoping to guess right often enough to keep their jobs.
​

If you liked Nate Silver, try Nassim Taleb's "Fooled by Randomness." His basic tales are of people who, having gotten lucky, conclude from that they are geniuses.

 

[marko]

I tend to trust the market itself. If the Dow doesn't panic by a headline (or quickly recover) neither do I.

 

[Lukeee]

I trust historical knowledge. While my crystal ball does not have the clarity to predict tops and bottoms of the market, it does have ability to let me know over long term it will work out in my favor if I stay invested and continue on my plan of AA and widely diversified investments.


I don't react to the various articles. As each day you can find the doom and gloom. I read some for perspective, but it's entertainment mostly.

+1 here. Trust history.. trust your knowledge and hone your instinct. The markets are very often about psychology rather than facts and a true understand what the markets reward. There are leaders that know what makes a stock move and play that game very well and there are others work on a different strategy. Take Warren Buffet and Elon Musk. 2 very different approaches yet two very effective leaders. They IMO appeal to 2 different kinds strategies to investing.

 

[Koolau]

I've been burned a couple of times in my investing life by believing such articles. It's true that all predictions of coming market collapses are true! We just don't know when. I've learned that the trick is to be set up for whatever comes - and in such a way that you can sleep at night.

Most here have AAs with 50% to 90% stock allocations. Mine is more like 30%. I've lost a lot of money by being such a chicken, BUT I sleep well and I can ignore all the impending-collapse stories. (AND I have "enough.") Last time we had a major correction (2007, right?) I didn't really lose anything. Not just because of my 30% stock allocation but because I had "wisely", heh, heh, invested in PMs a few years earlier. (This was part of the sleep-well-at-night strategy.)

If I'm making a point, it would be that sticking to the time-tested fundamentals of investing (wide diversification, pick-an-AA-and-stick-with-it, have an emergency fund of 6 to 12 months, ignore the financial porn industry, etc.) is still good advice IMHO.

One other idea I've used (on myself) is to run some "what-if" scenarios. What IF there's a 70% pull back? Would I have enough money? If not, maybe I need to rethink my current strategy. If 70% would mean I tighten the belt for a couple of years, I'm good. I've always had the belt, suspenders and elastic waist-band mentality, so I can (for the most part) not worry.

Don't really recommend any of this blather to others, but it seems to work for me. As always, YMMV.

 

[ShokWaveRider]

The video looks on the surface like a marketing presentation.

 

[kgtest]

I largely trust my own experience, the wisdom I've gained from other's along with the practicality of applying that to my own experience and I generally trust my judgement but have been caught off guard. Otherwise I trust no one.

 

[Lsbcal]

1) Have a process that you will follow based on the past historical data. That is all we have to go by, past historical data.



2) Convince yourself that nobody knows the future. The market anticipates via everyone's buys and sells. It reacts to events as they happen (not in the future).

 

[MRG]

I ignore the "experts". They know nothing.

 

[RenoJay]

I trust certain authors like John Bogel and Jeremy Seigel for long term investing advice. And both say to ignore headlines and stick with a long term plan.

 

[l2ridehd]

All the news media is focused on is what happened in the last 30 minutes. They couldn't take a long term view if their life depended on it. And most everything they report in their opinion with very few facts. It's all about getting someone to watch them. Nothing more. They care nothing about reporting accurate information. Our forth estate has become very useless.

So ignore 99% of what they say and do what you would do if you never heard them. As to who I trust? None of them.

 

[Conundrum]

What’s always mystified me is the pundits put their neck on the line in the name of ad revenue. They have no problem looking silly when they are wrong.

I trust nobody with regard to market predictions because time and time again the market proves nobody can time the market

 

[Crabby Mike]

The video looks on the surface like a marketing presentation.

As is everything I've seen on tat site.

 

[LOL!]

I watch others cash out their investments and buy gold ... and lose their shirts in the process. That's how I handle it.

If you like to feel smug and satisfied, that's what you will do, too.

 

[audreyh1]

By ignoring it.

+1!

 

[audreyh1]

Am thinking it really is time to up the Prozac and turn off the TV. Back to Woodhaven to work on the seawall, and maybe to up the 1 and 1/2 oz. four o'clock martini to 2 ounces. Prosit!!!

Yep, turn it off and do stuff that improves your immediate surrounds and you maybe won’t need stronger martinis or Prozac.

 

[ShokWaveRider]

From this particular article perspective. Is it fake news, or is there something really happening on August 1st? That is very close.