Are you rolling in media dollars yet?

What did you spend your last media dollar on?  You do know what a media dollar is, right?  Aside from being the legitimate scapegoat of all things wrong, a media dollar is one that you earned by watching and/or reading the financial news media (think CNBC, Bloomberg, WSJ, etc).  Surely all that worthwhile time you’ve spent watching and reading the financial news has resulted in an abundance of media dollars.  In fact, you probably have such an abundance of media dollars that you can’t even remember what you spent the last one on.  But wait . . . what if that doesn’t really hold true.  What if all the time you’ve spent watching the financial news media isn’t really paying out?  Then it’s probably time to think about doing something else with your time, unless, of course, you have a deep-seated crush on Maria Bartiromo that you can’t kick.

Here’s my story.  One day I woke up and did a personal inventory of what led to profitable trading and what led to losing trading.  (Yes, I meticulously track all of my positions in a spreadsheet and maintain a trading diary)  What I realized is that the time I was spending reading, watching, and (gasp) analyzing the news was nearly a 100% waste of time.  Initially I was somewhat surprised and then I realized that media is really just a vehicle for emotion and investments based on emotions tend to be very, very bad investments.  The next realization I had was that the time I spent reading trading books and backtesting trading systems was directly responsible for profitable trading.  The two realizations have totally changed the way I approach trading.

The real focus in trading is to make money over time.  While the process of becoming a successful trader is beyond the scope of one post, that process doesn’t necessitate an understanding of “why” things are happening.  The sad truth is that I’ve found ignoring fundamental information serves me much better than focusing on it or, even worse, attempting to make sense of it.

I realize that some people find value in fundamental information and want it to be at least some part of financial decisions.  I would suggest that you do the direct opposite of that.  I do believe it’s possible for some people to be successful using fundamental information, however, I am not one of those people.  I operate under the assumption that fundamental information is fully reflected in the price of an asset and a series of price data has much more value than what is being fed to you by the media.