This is one of those stories that requires a little setup.
My frequent flier miles were expiring and I had no travel plans. But if you think I’m gonna let a major corporation walk away with my rewards, you’ve got another thing coming. You see, I had the option of converting my miles to magazine subscriptions. And I had a lot of miles.
I get a lot of magazines.
“BusinessWeek”, “Forbes”, “Fortune” and many more fine publications of their ilk drop into my mailbox in an incessant march rivaled only in irrepressible fury by the Light Brigade. And it’s not like I don’t try to read them. I do. I just can’t seem to keep up with my magazine stack quickly enough for it to keep within the borders of one ZIP code.
A couple of weeks ago I was reading an October magazine. I won’t reveal which, that would be unkind. It had a rather spicy little prediction about what company was going to go up any day now.
I went online. No big jump since October, not in relation to the rest of the market, anyway. Oh, I wouldn’t have lost my shirt, either. But sometimes a stock is just a stock. And if following magazine predictions could make us rich, we’d all be a lot richer. I’m glad I didn’t shift my balanced portfolio in favor of chasing the hot stock of the hour.
I’ve started to play a little game. When my increasingly ancient stack of magazines tells me that a security was supposed to skyrocket sometime during the Bronze Age, I look up the chart using space-age Internet technology. It’s easy to see what a stock has done since a date of your choice. And to be frank, I haven’t been impressed with some of the experts’ predictions.
A stack of old magazines gives you 20/20 hindsight in paper form, and the benefit of hindsight is a fine thing. We can’t look at the most recent issue of a financial magazine and say for certainty if the author’s predictions and forecasts are correct. But if you know their track history, you know that hot tips are sometimes anything but.
Media just keeps moving faster and faster these days. You can get a big tip on a stock online but seconds after its publication. That means you can rush to buy the stock, along with a horde of other sheep, but seconds after said tip’s publication. Why wait a week for a magazine that might be wrong when you can be wrong right now?
It is important to be informed about the market and to understand the companies you invest in. Investments are to be chosen with real knowledge of what you’re getting into, not a tip in a magazine.
I enjoy reading my magazines, even if the size of the stack makes it seem like I’m putting it off. But I don’t take their predictions as gospel. The one on the top of the stack is two months old. It wants to tell me how to become a millionaire in 2007. And indeed its information will be helpful once I finally read it in 2009. But I’m not going to believe the hype on any ‘hot’ funds or inside tricks. If any one magazine article lands me a big score, it’s because I’ve sold the issue as an antique.
Responsible investing means thinking about the long term. And while news travels fast, and even happens fast, you don’t need to invest at that speed. Exciting things that affect the market happen every day, to be sure. But beware the big score. It may not be as big as the experts think. Recall the lesson of the monkey picking stocks with a dartboard. (Look it up.)
My stack of old magazines gives me perspective on a changing market, with a look at the past’s vision of its future combining most tellingly with a snapshot of the present. I just hope this article about it all turns out well. I expect I’ll get around to reading it sometime next June.