Hi Chris.. I can't tell if you're upset that business news commentators and analysts are part of the problem or if its just cynicism... I certainly feel both.
The biggest error in investing, in my opinion, is not learning early that its an arena of greed and deception. When we invest we're accepting those dangers so long as we make money, and the deception is our own winning or losing.
The news sources are in the business of selling advertising time. They are not in the business of offering investing advice, that's a content they offer to draw a segment of the viewer population. Another segment only tunes in when a headline screams "buy" or "sell" or "man explodes in car." They know they are selling our watching the advertising.. so they add content in the direction of emphasizing what's selling at the moment.
The analysts are in the business of selling stock. They have to be biased, to do otherwise would be as odd as a minister or priest dispensing atheism.
While the typical PE of the S&P is "around 15-17" as you note.. nobody makes money on a stock until its PE is below that value and makes a come back.. or until a stock's PE breaks out of the norm. Who wants a typical stock? Everyone wants a stock whose PE anticipates great things.
So the press, by printing negative opinions, is now doing what sells papers.. a front page headline touting the value of DELL being cheap given its growing market share while industry growth is flat.. that won't sell.. viewers want to hear about Enron and Wcom executives being skewered on Mercedes hood ornaments.
Last, in many respects its the same old story of the group on top (be it Roman citizens, French aristocracts, or Fortune 1000...) milking the public.
I got a kick out of hearing Enron's operations manager White, who made over 50,000,000 dollars, testifying that he sympathized with his co-workers. He too, is absorbed in the fantasy of greed and deception.. he's suffering? |
