I've from time to time seen news stories that seems to encourage investors to sell stock of certain companies and the writers provide the reasons why they think the company's growth will stall. At times they are right and most of the time they are wrong. Stock prices plummet . . . but they don't stay down forever. Should investors new to trading take such stock scares seriously or ignore them?
I think if a person is new to investing I'd tend to advise them to ignore them to be honest. While it's important to take on board and listen to as much advice as you can, I think people often think they then HAVE to act on that advice, and that's not the case at all. Sometimes doing nothing is also an option.
You can and should listen to what other people say about a certain stock. However you should never make an investment decision based on their opinion... by all means hear them out and see if they point out something that you've missed... but don't take their word for it. The only reason I read websites like Seeking Alpha is to get another perspective, sometimes other people see things that you don't. THen you just need to check their facts and make your own assumptions based on those facts.
You should look at WHO is giving the info or advice. If it's a bigtime billionaire investor, respected fund manager, or big institutional player, by law he's acting in good faith, and the info is likely to be good unless it's a rare occasion that he's wrong or has bad info. Of course this does not guarantee that the accurate info will necessarily lead to a corresponding movement in the price anytime soon. And he likely has already acted on the info he's sharing, so the pop up or down for you may not be as much as it will be for him. As for the anonymous herds online and the little-known hacks on tv, take everything with a grain of salt. If it can't be verified, there's a good chance it may not be good info. And if someone is deliberately spreading info they know to be false in order to induce others to trade on that bad info, they're committing a crime.
^ This, big time. If it comes from a credible source, take it seriously. However, the number of folks running around like chicken little is legion in any market. At best it is noise.
I have learned from a successful financial advisor that when the market goes down, it indeed is not going to be down forever. They say if you're investing your money for a long period of time, then the market going down shouldn't scare you since it's only paper loss. And when the market is down, the more that one should invest because eventually the market will soon go up. Up until now I'm still trying to incorporate what I've learned about not becoming discouraged when the market falls. These things give me positive outlook on my investments.
I think a new investor should definitely listen but that doesn't necessarily mean they should act on what they hear. It's always important to know what market opinions are and the underlying narrative behind a stock. As someone that used to always be creating such narratives on stocks, I always knew that I never had a crystal ball but I also always had to have an opinion. So take whatever someone says on TV as pure opinion and manage your exposure to these stories accordingly.
I definitely agree with you JR. I think we should be very careful on who we listen to because there are a lot of people out there who pretend to be experts on investing but the only thing they do is lure you into a pit hole. Whenever I do my research about the latest on the market, I usually prefer looking through the popular and widely credited ones.
There's this perception that if a respected newspaper carries a financial story by an experienced journalist, then there must be at least a modicum of truth behind it. But why would anyone who has an edge in the market from having a certain piece of information want to blunt that edge by sharing it with everyone else? I always try to see the "story behind the story" when it comes to financial journalism, and never take anything on face value anymore.
