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The Reformed Broker

Financial news you can start ignoring

When everything is shouted into a megaphone (repeated across 500 websites), it all sounds so urgent and essential. But it isn't.

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Mohamed El-Erian probably made over 500 TV and radio appearances in 2010, not once did he tell you about Redbox ($CSTR). Or Netflix ($NFLX) or IMAX ($IMAX). Or Ugg Boots ($DECK) becoming a perma-brand like Nike. Or Green Mountain Coffee ($GMCR) becoming the new Folgers. Not once did he mention the fact that fashion and entertainment defy the business cycle and that teens will find a way to spend on new stuff - even against a backdrop of 21% unemployment for their age group.

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3. Equity Mutual Fund Managers:

They're all over TV and print again, and what's worse, their confidence is back. They're crowing their successful investment stories again as the painful memories of 2007-2009 begin to fade. They must be ignored at all costs. They will make projections about cumulative annual growth rates for their portfolio holdings going out 5 years. They will use these projections to justify high valuations and performance chasing. They will smile at you through their makeup from your television screen as if they are 95% long because of a Sixth Investing Sense that only they possess. This is not the case.

They are fully invested because John Hancock and Fidelity pay them to be. Their job is to find and hold attractive stocks at all times, even when market conditions overall are unattractive. They are always optimistic because they cannot raise assets for their funds otherwise. They are not on TV to suss out the truth or have a frank discussion about asset allocation, they are on TV to raise money. Smile!

They will remain equally optimistic on the way up the mountain and on the way off the cliff, never seeing either the ascent or the fall coming ahead of time.


There are many pieces to the puzzle out there, almost too many important things to keep track of for market participants on a weekly basis. Insider selling, newsletter grumps and stock fund managers are three pieces you can discard to make your life easier - they offer nothing of consequence to any who heed them.

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