"In my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather an investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the Marketplace."
-- Warren Buffett in 1987 letter to shareholders of Berkshire Hathaway Inc.
Buy! Sell! Short! Boom! Crash! Panic!
The constant barrage of market news and opinions has got much worse than anyone could have imagined back in 1980s. One can get easily lost without clear principles on which articles are worth reading and who to believe.
Fugazzi
I personally dismiss articles that are not based on real fundamentals. These include articles where author tries to time market or uses extensively technical analysis.
I suppose every investor will at some point get lost in moving averages, trend lines, support levels, resistance levels, MACD, RSI and so on. To me it happened quite early on. People want to believe they can predict the future via past/present and that they are smarter than the others. And everyone will try to time the market.
There are a lot of people who benefit from frequently changing mood of "Mr. Market" and keeping up the illusion that this would be predictable. In fact, the ones who benefit have also clear incentive to feed Mr. Market with either fear or greed - whatever it takes to create fuzz.
The stories can be based on company fundamentals, market fundamentals, market timing, pure technical analysis or unicorns and fairy dust. They really don't seem to care.
In the modern attention economy market commentators, blogs and news media get paid by clicks they get. So they want to create a lot of stories and market them via luring click-bait titles. However, sharing advertisement revenue via various mechanisms pales in comparison to profit that 'masters of the universe' have been extracting as long as there has been a stock market.
Enter vampires
"Name of the game, move the money from your clients pocket into your pocket."
-- Matthew McConaughey (playing Mark Hanna) in the movie 'The Wolf of Wall Street'
There are two main ways to milk a client in investment services business.
Somebody always benefits from trading (buying and selling) no matter what is told to the customer.
Secondly, some financial assets (e.g. mutual funds) expose clients to periodical holding and other costs (some of which may be well hidden especially in the case of mutual funds wrapped inside an insurance envelope).
The providers of financial services seek to maximize both.
Neither is in the interest of the individual investor.
To be continued (in part II) with e.g example of dream customer (for vampires)..
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