TURN THAT TV OFF!!!
As much of a narcissism-boost as being a regular on financial television is, in truth it rarely helps viewers make money…though I personally bring an actionable investment idea to every appearance to separate me from the talking bobbleheads.
Here’s what you need to understand:
TV is actually just infotainment. It’s hours and hours of half-baked opinions and a constant need to drive emotion, whether that’s fear of the next crisis or greed from missed opportunity.
A can’t miss announcement, economic data point, or clarion call is always just a few minutes away. The hype and hyperbole never take a break so you stay right there.
Not a minute goes by that CNBC, Bloomberg, Fox Business, etc. do not overhype news or numbers to keep everyone on the edge of their seats. That is by design, so that you are glued to the TV/internet feed every minute of every day…
It’s simply not healthy or advantageous for traders. Period.
Like I always say, “MAKE THE MARKETS WORK FOR YOU, Don’t work for the markets.” And part of that is limiting TV viewing.
Watching the business banter can (and often does) crush your plan as emotion takes over.
Trading is about confidence in your plan and the discipline to execute it. One of the worst parts about taking in more information (especially from unreliable sources like TV talking heads) is that it causes second guessing. Taking a loss, for example, is already psychologically challenging for most traders… Add in 10 new opinions while still reeling from a down day and you can easily self-sabotage an otherwise profitable game plan.
You have to learn to lose, to be a consistent winner. Taking a loss does not make you a loser, it frees you to pursue your next planned opportunity.
Think about how many times you took a specific recommendation of what to buy or sell, at what price and what level of risk…
Those gurus don’t often get into the reality of setting up a trade, but rather talk big picture about what could and maybe should happen.
Investors need to make personal trading decisions based upon their individual market experience, risk tolerance, and time duration. Not just follow the last big swinging dude on TV.
A proper plan should not be swayed by what an analyst says good or bad about an investment play. Remember, they get paid for selling ads and keeping viewership at lofty levels.
Once you understand they are there to entertain it changes the game!
In these uncertain markets, this can be more important than ever. You may be taking some losses right now given how the overall market is shaping up and that’s OK.
The last thing you need to do is panic and throw yourself from one emotional “revenge trade” to the next (it’s never good to be a trader “on tilt”).
My recommendation is to take time going back to your long term plan and strategy. Focus on discipline and execution. If you have a strategy that’s designed for volatile markets, rely on that.
Months like this are why I always have a portion of my capital going to premium producing strategies. I am always collecting premium and, worst case, I am buying stocks at a discount.
There’s lots of things you can do when challenges are present in your investing. Giving into your emotions isn’t one of them!
Trade well,
Alan
PS If you don’t have a volatility-based strategy, consider joining my Weekly Income Alerts program where we focus on generating premium (upfront cash) in our accounts regardless of what the market is doing.