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Who Should You Listen To?

13 October 2010 No Comment

When it comes to investing and the stock market, everyone has an opinion.  Turn on the TV and you’ll hear why the market is going up, why it’s going down, what stocks will dominate, what stocks will do terribly.  Who should you listen to?  Answer: everybody and nobody.

I have my views and I often tell my friends about them.  Sometimes one of my friends will say, I saw so-and-so on TV this morning and he was saying to do X – where X was usually the opposite of what I think one should do.  I’ll often respond with, well who was he and what was his reasoning?  The response to that is “I don’t know.”

Just because a guy is on TV doesn’t mean he’s better at predicting the stock market than someone who isn’t on TV.  Most people on TV did not predict the economic crisis, in fact, they were predicting the opposite.  Furthermore, just because someone has a fancy or degree also doesn’t mean they have the best idea of what the markets are going to do.  You can bet that these people will all subscribe to the mainstream Wall Street view of investing.

So who do you listen to?  I think you should listen to everyone, but be skeptical of everyone (including me).  Seek out different views and opinions and compare them with what you know about the economy and about the markets.  Read lots of stuff of various opinion and read lots of stuff supporting various viewpoints.  The more you read the better.  Again, be skeptical of all.

As you continue this process, you’ll start to form your own opinions and views and then you can start to read things that will challenge your own opinions.

Since I’m fully aware of what I believe is going to happen, I actually seek out more material on the opposing view than the supporting view (most people read exactly what they want to hear and what they already agree with), because I want to make sure I’m not missing something.  I want to make sure that there isn’t some angle that I have overlooked.  I want to be convinced I’m wrong.  If I find something that I might be wrong on, I start to possibly re-formulate some of my views.

So, to conclude, more than anything, make sure you are skeptical of everyone.  Don’t buy into what any one person says.  Secondly, read as much stuff as you can get your hands on.  Lastly, read things to challenge your own point of view.

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