Following the headlines can be lethal to your finances

In times of great stress, like when your equity portfolio is down 60% as it was in the beginning of March 2009, people are anxious and in search of information that can satisfy their horrendous feelings.

Unfortunately, news sources who are willing to provide that information are just as likely to provide the wrong information as the right information – how can you tell which to follow? Luckily, most news advice is ignored, but when published by a credible source, it is too often mistakenly followed.

Such was the case on March 6, 2009 (the absolute low of the market – perfect timing) when the Los Angeles Times reporter Joe Queenan provided his opinion in Panicked by the stock market.

“I decided that the time had come to panic… This is the time for hysteria.”

What do Visible Investors observe about this writing?

1. Joe’s “401(k) is now about half the loaf it once was” – taking more risk than he could stand to take (most individual investors think they can withstand a lot of risk in times when times are good) f.orced him into action he will later regret.
2. Newspapers are for entertainment, not actionable information. Joe was confused by the information he was getting from his own sources, and even quoted pundits and “well intentioned journalists’ advice” but fell into the same trap he was warning about in his article.
3. Joe felt there was more risk in his portfolio when it was down 50% than when it was at its high – exactly the opposite of the reality.
4. Joe did not have cash reserves available to take advantage of the opportunities that panicked investors presented him with.
5. By the way, who is Joe Queenan and why was he qualified or given the right to write this article? And what about a follow up piece to apologize to all of the individual investors that were harmed when they followed his advice? (In the following days “Letters to the Editors,” people actually thanked Joe for getting them out of the market – can you imgine what those people are thinking today? And can you believe this that his latest article is a ‘who done it’ book review).
6. Buying high and selling low is a formula for disastrous investment returns.

If you are confused or panicked, you are not in position to make a decision that will affect your quality of life your 30+ years of retirement.

Contact Visible Investment Advisors for an individual solution to your current situation.