Overdosing on Opinions
What’s the one thing that’s free, found in ready abundance, doesn’t need to be mined or manufactured, and is happily lent and offered?
An opinion.
Opinions are omnipresent for traders. You can check out CNBC and Fox Business. You can read the Investor’s Business Daily or check out the Wall Street Journal.
Then there’s blogs… I write that hypocritically.
Being connected to so much information and opinion is a good thing, right? It’s part of the whole Singularity where everything will be composed of information, right?
It can be a good thing. It can be bad, too.
The inundation of opinion, tips, statistics, and information can overwhelm a trader and cause negative returns. One of the obvious manifestations is what I call “the supermarket cart” trader.
Ever see a shopping cart in a big box store, like Walmart or Target? (Hell, look at mine sometime.) It’s kind of funny. The shopper will have bread, milk, a flat screen TV, greeting cards, and, while maybe not the kitchen sink, they might have the kitchen faucet thrown in.
The portfolio of a trader who follows every opinion out there will soon create a shopping cart of assets, reflecting every trend. They’ll have a few positions in the dollar, a couple shares of GE, a short position in corn futures… The list goes on.
They jump on every trend that’s touted on CNBC, or was profiled on the Wall Street Journal.
Avoiding this opinion overdose isn’t easy. You could restrict your information diet, but you may miss important ideas and solid tips.
You could also focus on one asset and become an expert on when to trade it. But that limits you and keeps you from diversifying your portfolio.
Another idea is to use technology to help pick and trade, at least a portion of your portfolio.
Unlike the talking heads on TV, computers aren’t forced to be entertaining. You can set some parameters on what trends you pick–and which ones you dump.
This post has been brought to you by matt
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