Why Listening To The Mainstream Media Can Ruin Your Portfolio

Years ago I used to be a news junkie. I bought newspapers regularly. I liked to keep up to date with what was going on. Perhaps you did (or still do) too…

Then I stopped. As an investor, trying to find profitable opportunities for readers of my investment advisory, Crisis & Opportunity, I realised that less is more. Too much information clouds your judgement. It’s just noise.

The approach works. In the nearly four years that I have been doing this, the average stock pick in the Crisis & Opportunity portfolio has outperformed the market twice over. That’s including all stocks — winners and losers.

Shutting out noise isn’t the only reason for this outperformance. There is a process involved and consuming less media and opinions is just a part of it. But it’s an important part. As I often tell my readers, it doesn’t matter what you think, it matters what the market thinks.

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Why consuming the mainstream media is bad for your investment portfolio

I’m telling you this not to brag about the numbers, but to let you know how dangerous the power of narrative can be to an investor. When you consume modern day media, you’re consuming a narrative that someone else is imposing on you.

And if you go down a narrative path, you won’t see what’s really happening and can miss important money making opportunities. You don’t see things objectively enough.

Good narratives have an emotional hook. They appeal to the emotional you, not the ‘homo economicus’ you’ll find in economic textbooks. These books tell us that we are all rational thinkers. We’re not.

The mainstream media has worked this out. Actually, they worked it out a long time ago, but now it is far more insidious. They prey on emotion daily, while operating under the guise of telling you the truth.

But whose truth is it? Is truth objective or subjective?

The latest incarnation of this is social media. These are platforms where people can go and enjoy carefully selected opinions that suit their prevailing biases. Social media can be useful if used properly, but it is often just an echo chamber of similar opinions masquerading as truth.  

Yesterday I pointed out how President Trump singled out these new media companies for quashing conservative voices. I told the story of how Facebook board member Peter Thiel moved out of Silicon Valley because of the rabid left wing ideology that pervaded the place (irony, anyone?).

Soon after, this report popped up on the Zerohedge website:

According to a memo posted on Facebook’s internal message board titled “We Have a Problem With Political Diversity”, and which was published by the New York Times, senior Facebook engineer Brian Amerige confirmed Trump’s allegation writing that “we are a political monoculture that’s intolerant of different views” and shockingly admitted that “we claim to welcome all perspectives, but are quick to attack — often in mobs — anyone who presents a view that appears to be in opposition to left-leaning ideology. We throw labels that end in *obe and *ist at each other, attacking each other’s character rather than their ideas.”

The scathing indictment of Facebook’s liberal “mono-culture” continues:

We do this so consistently that employees are afraid to say anything when they disagree with what’s around them politically. HR has told me that this is not a rare concern, and I’ve personally gotten over a hundred messages to that effect. Your colleagues are afraid because they know that they — not their ideas — will be attacked. They know that all the talk of “openness to different perspectives” does not apply to causes of “social justice,” immigration, “diversity”, and “equality.” On this issues, you can either keep quiet or sacrifice your reputation and career. 

“These are not fears without cause” Amerige writes, and continues the stunning disclosure of the company’s biased culture, “Because we tear down posters welcoming Trump supporters. We regularly propose removing Thiel from our board because he supported Trump.

What the?! Seriously?

Look, I went through a lefty stage at university. But when you get into the real world and see how it works, you realise that the whole redistribution of wealth thing has its limits.

The benefits of logging off

These tech kids (well, adults with the mind of a kid) have grown up in an era of such easy money that the ‘real world’ that you and I know doesn’t exist!

It’s a massive concern.

When you have the mainstream media setting a narrative, and then the large tech platforms trying to enforce that narrative by shutting down competing voices, you know you’ve arrived in the land of George Orwell.

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It’s just harder to see today because social media allows us to cherry pick our best moments. Many people don’t open their doors or their hearts anymore. Rather,  they only reveal carefully crafted windows into their lives. Pictures of cappuccinos and smashed avo on toast, and holiday’s in Bali or Europe in the summer are the reality show that a lot of people live these days.

No one wants to see you dragging yourself out of bed to go to work, or a rushed breakfast, an annoying commute, a trashed house from out of control kids, piles of washing, half arsed school lunch boxes, or sitting up too late to get some downtime in before you wash, rinse and repeat.

That’s life. Unsanitised, but beautiful nonetheless.

Embrace it, and disregard the phonies. You’ll be better off.

As an added benefit, doing so can improve your portfolio performance too. I’ve shown this to my subscribers regularly over the past few years. It sounds weird, but trust me, it works.

On that note, I’ve got a new report coming out next week that explores a sector the media simply isn’t talking about right now. There is no popular narrative about it, not yet anyway. This is the perfect set up for what I hope will potentially be big future gains in the years ahead.

Keep an eye out for it.


Greg Canavan,
Editor, Crisis & Opportunity

Greg Canavan is a Feature Editor at Money Morning and Head of Research at Fat Tail Investment Research.

He likes to promote a seemingly weird investment philosophy based on the old adage that ‘ignorance is bliss’.

That is, investing in the Information Age means you have all the information you need at your fingertips. But how useful is this information? Much of it is noise and serves to confuse, rather than inform, investors.

And, through the process of confirmation bias, you tend to read what you already agree with. As a result, you often only think you know that you know what is going on. But, the fact is, you really don’t know. No one does. The world is far too complex to understand.

When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases.

Greg puts this philosophy into action as the Editor of Crisis & Opportunity. As the name suggests, Greg sees opportunity in a crisis. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines traditional valuation techniques with charting analysis.

Read correctly, a chart contains all the information you need. It contains no opinions or emotion. Combine that with traditional stock analysis and you have a robust stock-selection strategy.

With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the basic, costly mistakes that most private investors do every time they buy a stock.

To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Money Morning here.

And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here.

Official websites and financial e-letters Greg writes for:

Money Morning Australia