Broker Check

Follow Data, Not Drivel

| July 01, 2019
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At Cornerstone Financial Services, we talk a lot about eliminating the noise from the financial media (especially bad news), and instead being data-driven to find real opportunities.

To drive that home further, let’s be clear about a few things.

First, yelling and making a scene is good for TV. Some members of the media try to scare you in order to sell ads.

Second, what’s good for TV sells ads, which is the media’s true business.

And lastly, if advertisers don’t see results, they pull their ad buys.

This is a short-term game, driven by fear and volume. It causes people to worry and make fear-based trades, which only benefits trading platforms and brokers collecting commissions.

When you play the long game and focus on data instead of drivel, you see things differently than many of the pundits.

Consider the chart below. It shows a one-week return along with returns since the market bottom last December.

Looking at the one-week returns, you might think they’re tiny. Conversely, you might think the few losses are quite big.

More importantly, look at what’s happened over more than six months – double-digit returns across the board. The “smart money,” also known as investments from professional institutional investors, has been sticking it out. And it’s been winning as a result.

What else has the “smart money” been doing?

The below chart shows the large buying and selling signals across institutional investors.

People are always looking at headline news. And worse, they’re basing investment decisions off it.

You’d be much better served paying attention to institutional investor activity, like in that chart. That data will help locate where the real opportunities are, instead of scaring you to trade, trade, and trade again.

The best advice we can give is to stop watching the TV screen because it will simply scare you to death.

Instead, listen to Warren Buffett. He once compared farming to investing when he said, “You don’t get a quote on your property every day.”

In other words, don’t look to sell the farm on a daily basis.

When you pick top-flight, A-rated stocks, and combine that with the patient wisdom to see the investment through, you’re dealing in “smart money.”

Securities sold through CoreCap Investments, Inc., a registered broker-dealer and member FINRA/SIPC; advisory services offered by CoreCap Advisors, Inc., a registered investment advisor. Cornerstone Financial and CoreCap are separate and unaffiliated entities.

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