The evidence is clear. Markets do a great job of setting prices. Markets aren’t perfect but they do such a good job that they make it nearly impossible for investors to outguess the markets and cover their costs.
We, at Independence Advisors, know that this runs counter to what investors are told on a daily basis by the financial news media. However, the fact that CNBC’s ratings have been in decline may be evidence that the investing public is beginning to see that watching the pundit of the hour on TV doesn’t help improve their investment returns. If CNBC really provided useful investment information that helped investors improve their returns, wouldn’t their ratings be increasing?
As Weston Wellington of Dimensional Fund Advisors is fond of saying, “The point is not to demonize the news media. They are simply reacting to market forces.” They are creating the entertainment that viewers and readers want even though that content may not help them be better investors. The problem is that investors seem to have trouble differentiating between entertainment and investment advice.
Earlier this month, we launched Evidence Based Investing to help counter that problem. Our first video on Market Pricing is a great place to start if you would like to learn why markets work and how you can use that to your benefit as an investor. We hope that you find the video informative. We would appreciate your feedback