Stock Market Investing - Should You Listen To The Experts?

Stock Market Investing - Should You Listen To The Experts

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One of the first things people do when they start becoming interested in stock market investing is to seek out advice from other people to see where the overall market is heading. So they will often watch the financial news channels and learn more about the state of the economy in the financial pages of their newspaper or on the news. However should you really pay attention to these opinions?

Well I've been investing in stocks for several years now and my own view is that at least 99% of these opinions should be disregarded. The simple fact is that everyone has an opinion on the future direction of the market. Some people think we are heading for a double dip recession, some people think the markets will drift around their current levels for several months, and some people think the markets will make new highs later in the year.

The reality is that at the end of the day no-one really knows where the markets are headed. I certainly don't. However you don't really need to. If you concentrate on the fundamentals of the stocks on your shortlist, there will be times when the wider market falls (like it did recently) and you will have opportunities to start accumulating high quality stocks (ie those that are increasing both their earnings and dividends each year) at bargain levels.

If you listen to the experts you would never buy any stocks because often when the markets are falling and bargains start presenting themselves, the financial media are full of 'experts' telling us how much the markets are likely to fall, and warning of impending doom ahead. You simply have to make your own mind up and try to block out the views of the so-called experts. There are a small handful of people who's opinion may be worth listening to, but on the whole most people simply do not know where the stock markets are heading.

The same can be said about analysts who issue reports on individual companies. A common joke amongst traders is that if a broker advises clients to sell shares in a specific company, it's worth buying them, and vice versa if they advise people to buy shares in a company. The reason why is because of how often they get it completely wrong. You only have to the look at the collapse of the banks for evidence of this, because many analysts were issuing buy reports at various stages of the collapse, and all the time the prices just kept falling and falling.

So what I'm basically saying is that you shouldn't take too much notice of what all the experts are saying, because they are very often wrong. Make your own mind up and only buy shares when the time is right, ie when they start trading well below fair value. That way you can only blame yourself if you fail to make money from your investments.

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