- Often, a client will ask what I think of what so and so said on the news. This is natural and understandable.
- Like when Bill Ackman cried on TV and used the term “Hell is coming” near the lows in 2020, as he was buying stock.
- Or if Goldman says commodities are going up 50% this year because of this or that. Frankly, odds are that if Goldman says it’s going to go up, they are probably shorting it. That’s how useful following opinion pieces are. They get into your psyche and infect your decision making process, when the reality is that most media opinion pieces are there to try to sell advertising. In Goldman’s case, it’s likely because they are trying to sell you something they want to get rid of. It’s a natural part of the market process and it needs to be understood and managed.
- Even the legend Paul Tudor Jones was in the news recently touting inflation as the only position to have on right now. The thing is, he is also well known for holding positions extremely loosely, and will turn around his whole book in a very short period. By the time his view is in the news, he could be doing the opposite, such is his strategy, and he’s legitimately good at it.
- Investors need to know their own time frames.
- Jim Cramer mind you, though told to be a successful hedge fund manager in a previous life, is on TV to sell advertising. That’s ok, but we need to realize that fact. I do not begrudge him for it.
- Below is a chart of West Texas Crude with comments made by Jim Cramer re: the Oil Price since the lows of 2020.
- This is why investors MUST have a decision making process that does NOT in any way shape or form incorporate headlines, or what other people are “saying”.
- In our view, the best process is to turn off the TV, ignore headlines, study the fundamental case for an investment and systematically follow price while managing risk.
Source: Aron S. Chopra, CFA, CMT