Investing, Personal Finance 

What I Learned Watching Bubbles: Magazines Are Slow

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If you’re like me, you missed the tech bubble, the housing bubble, the oil/energy bubble (that we’re still in), the dollar deflation (slowly recovering, who knows if it’ll fully come back because of our debt), and now the commodities bubble (gold falling 13.5% in three weeks!)… so I neither gained nor lost tremendously with the coming and going of the latest “bubbles” but there’s a lot that can be learned from the sidelines, here’s the first lesson that I’ve picked up…

(Remember, I’m not a professional and I can easily, and often, be wrong about any of these “lessons” I think I’ve learned. If I am, or if you have an opinion, please do share. Don’t let me be the emperor wandering the streets like a madman. Some of these lessons seem like “common sense” but you’d be surprised…)

Lesson #1: If It’s In The Paper, It’s Over
Call it the Madden curse (where the player on the cover of EASport’s Madden football game always gets hurt that season) or the Business Week cover curse, but once a magazine picks up on a story then chances are your opportunity to cash in is over.

This makes perfect sense once you sit down and think about it. With the internet, information appears almost instantaneously and the market reacts seemingly faster than instantaneously. Ever notice how a stock price moves minutes before an “official” announcement?

Magazine writers need to conduct the research, then fact check, then the company needs to then print, then bind, then distribute the magazines. Finally, they need you to go to the newsstand and buy it (do you wait for the newsstand to open the day Business Week is delivered?). Now, certainly you could catch the elevator going to the 20th floor on the 7th, but how many times are you going to catch it on the 7th right before it goes to the basement?

So lessons #1 is, don’t believe the hype and sit this one out. If the first time you think about it is after you’ve seen it in a magazine or the newspaper or some other print medium, you’re not on the ground floor… you only think you are.

{ 4 comments, please add your thoughts now! }

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4 Responses to “What I Learned Watching Bubbles: Magazines Are Slow”

  1. Anonymous says:

    AKA the efficient market theory. I’m currently reading the book “A Random Walk Down Wall Street” and it goes in to detail about this theory. To an extent, I agree that the markets immediately correct to the news and by the time it hits paper, it’s probably too late. Best reason that I’ve ever heard of for index funds.

  2. Trust me on this one I know about the Madden curse. People need to be careful about what they put and the net as well.

  3. Matt says:

    Keep in mind, though, that just because you’ve seen it in print doesn’t mean it’s _over_…just that it’s almost certainly too late to make a killing as a bull. It may well be several months or even years too early to make a killing as a bear either. (By 1997 I knew the internet bubble was going to burst. If anyone had listened to my investment advice then, they’d have lost money.)

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