Comic on Trading with the Masses

Oct 13, 2007: 3:26 PM CST

I wanted to share a little levity to the recent market action, and give a comic from WeBlog Cartoons a little ‘market spin.’

This reminds me of the ‘battle’ successful retail traders have with unsuccessful retail traders who base their trading decisions on the financial news networks (especially from ‘colorful’ commentators) alone.

“I bought XYZ because the TV told me to do it.”

“I’m buying into mutual funds because the TV told me to do it.”

“I’m selling everything I have in stocks because the TV guy scared me.”

In all seriousness, people follow what they hear from the TV Financial Networks in droves, often without thinking. It’s easier to do so because doing your own research takes ‘too much time’ or ‘too much effort’ or ‘you don’t know where to begin’.

While the TV networks have ‘eased up’ in their bearish projections that they have been forecasting recently, some shows were extremely negative on the US Stock Market and some called for radical readjustment of capital… just at the near lows of the recent move. Those traders/investors who followed that advice quietly literally sold as near to the recent lows as possible. Why did they do so? “Because the TV told me to do it.”

Maybe the “TV” said that slowing corporate profits, a housing crisis, declining dollar, weaker retail sales, increased foreclosures, and whatever they could find is evidence of an impending market disaster.

Those who sold have already missed out on a large expansion in the major US Indexes, which has led to the Dow & S&P 500 making new all-time highs and the NASDAQ making a six-year high.

Next time you “go to the shops on Saturday,” make sure you have a better reason than “because it says to do it on TV.”

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