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Don’t Put Too Much Stock In Talking Heads




 By Bob Payne, Managing Director and Chief Investment Officer (CIO)

We live in an unprecedented era of global connection. Thanks to the Internet, ever-advancing technology and the impact of times zones, it’s a 24/7 news cycle. In this frenetic environment, the business media has turned into a never-ending carousel of one so-called investing guru after the next. So a common question I hear is, “How much emphasis should typical investors and potential investors put on financial advice they see or hear in the media?” My answer: Not much.

Three Keys:

If a stock is mentioned in a prominent media outlet, its price will likely change instantly

So-called “investing gurus” are often just ad-selling entertainers

The best strategy is to consult a trusted advisor who will custom-build a portfolio for you

A recent study actually found that any time a stock is mentioned on CNBC, whether positively or negatively, the price of that stock moves immediately. Just think about it – you have some guy sitting in front of a half-dozen cameras on national television, giving advice. Could you possibly be the only one listening? The reality is the minute that information comes out of his mouth, it becomes old news. His perspective has been heard by thousands, if not millions of other investors, and whatever edge it might have given you is totally lost.

So my advice is to treat talking market gurus like the ad-selling entertainers they’re meant to be. Listen to their recommendations, but with a gigantic grain of salt. Here’s what you really should do. Sit down with a trusted advisor – somebody who will put together a master financial plan and build you a diversified portfolio with a mixture of equity index funds, individual high-quality bonds, and alternative investments like high-yielding real estate. A portfolio that’s going to be recalibrated every year according to your distinctive risk tolerance as you get older.

That’s the type of strategy you need to help you weather whatever storm might come. The market has certainly been in a storm lately, and I’ll tell you what – if you sit down with a trusted advisor, you’ll be the better for it. At Payne Capital Management, we specialize in expertly tailoring customized portfolios to each of our valued clients based on their individual goals and circumstances.