Instant financial news may distort view

Published 3:35 pm Friday, November 21, 2008

You’ve undoubtedly watched the financial media circus for the past decade.

You can recognize the electronic players by the volume of their voices and the print members of the group by the breathless tone of the prose as they promote little-known stocks with a not-so-subtle implication that if you don’t buy them now, you’ll be missing the only chance you’ll ever have for instant riches.

Savvy investors don’t waste time with the televised, Internet and newsletter pitches that replace sound investment advice with hyperbole, but some observers do worry that it is becoming increasingly difficult to separate the genuinely useful information from the deceptive. In reality, instant information can’t always be summarily dismissed.

No matter how it’s delivered, news that one of the high-dividend payers you’ve been counting on for retirement income has slashed its payout due to financial difficulties can be useful. After due consideration, you might want to make some changes.

On the other hand, to act precipitously on “spot news” that a solid company in which you have invested for the long term has missed Wall Street earnings projection by half a point (and the stock has immediately swooned), can be long-term foolish, especially in volatile markets such as those of the last two years.

Essentially, investors know that short-term market moves should not be signals to act, yet the volume and insistence of the repetitive 24/7 news cycle tend to subvert that wisdom.

Your solid company’s earnings shortfall for one quarter may be nothing but a barely unnoticeable blip in its overall profitability, but after you hear about it 20 times, it may be difficult to ignore.

If you don’t follow the markets closely, all this quick news is irrelevant. If you do follow the daily ups and downs of various market indices, perhaps the wisest course is to pay passing attention to the financial news of the day without letting it influence your long-term investment decisions.

Stephen P. Poitevint is a Registered Principal and Financial Adviser with the firm of Raymond James Financial Services, Inc., member NASD/SIPC, and is located at 908 Tallahassee Hwy., Bainbridge, Ga., and can be contacted at (229) 246-7208 or www.poitevint.com.