The Bias of Investment News

May 1, 2026

Why Professional Investment Management is necessary

Traditional economic indicators are often poor predictors of a stock market trend. One of those indicators is the news. It can increase emotional reactions among investors, but it will not accurately predict stock market trends. Here is a hypothetical example of financial news that you may be exposed to in a week:

News at noon: “Stocks up on manufacturing data…”

  • News expounded that the manufacturing industry has grown for the first time in 18 months, giving the stock market a boost.
  • This market sector increased slightly in the morning trading hours.

News at 3:00 PM: “Stocks fall after manufacturing, housing data…”

  • Stocks retreated temporarily, giving up earlier gains.
  • One sector can affect the broader market if it temporarily gains or retreats in value.
  • The initial news looked good, but what happened? Most investors can’t give you an answer, but many can tell you that the market does move up, down, or sideways, often all in a single day.

Be careful of the Street Booyah!

A mutual fund or stock investor may be influenced erroneously by the current news. This can cause emotional swings, alternating between joy when the media sounds good and fear when it is pessimistic. Financial news from many sources alternates between good and bad, or vice versa, over and over again. It can be unsettling for the unprofessional investor.

A rash response can cause an investor to sell a fund or a stock holding, due to fears caused by the many voices of “talking heads” spinning news-bits about investing, which we witness in the investing news media daily. The media gets news bites out quickly but misses the big picture: markets will rise and fall, and can climb right back up in two or three-day periods, appearing like a roller coaster ride to the average investor. For example, during the 2019-2020 pandemic, the market lost value very quickly in March 2020, but by September 2020, markets had entered an amazing bull market, bringing many funds and stocks back to record highs. Of course, we don’t know what the future holds, though we have seen that long-term investing can and has paid off for many.

Professional investment management

Professional analysts are trained to analyze market trends and can allocate capital to the proper buying and selling of an investment fund’s securities. News stories are always one step behind the market, never ahead of it. The media is as fickle as the wind, securing information that can change in as little as a few minutes. Don’t build your wealth on the daily broadcast! Hire and utilize professional investment managers who know their business.

 

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