Coronavirus causes a global epidemic. President Trump getting impeached. Wildfires in Australia. The UK leaving the EU. These are all major headlines we’ve seen in the news over the past few months.
As people, we are incredibly well informed, yet we know incredibly very little. Why? Because over 200 years ago, we invented a toxic form of knowledge called “news”. News is to the mind what sugar is to the body- appetizing and easy to digest.
Journalists constantly use the news to justify events that happen in the market. Two days ago, the Dow Jones rallied 500 points and a headline of a major publication read, “Dow rallies on the positive outlook that Coronavirus cure is on the horizon.” This headline is merely clickbait to attract readers who are dying to give a reason for a market rally written by a journalist whose job it is to feed this salacious appetite.
Our brains react disproportionately to different types of information. Scandalous, shocking, easy to absorb, and fast-changing details all stimulate us. Whereas abstract, complex, or complicated information sedates us. News producers capitalize on this. Exciting stories, brash images, and sensational “facts” capture our attention. As a result, we walk around with a distorted mental map of the world and the risks and threats we actually face.
99% of news is irrelevant. In the past year, you have probably consumed thousands of headlines and news snippets. Now try to think back and name one of them that helped you make a better decision for your life, your career, or your business compared to not having that piece of news. Chances are you can’t think of more than a few that have benefited you. News organizations convince you that their information gives you a competitive advantage. If news really helped you advance or gave you an “edge”, journalists would be the highest income earners in the world. In reality, it is quite the opposite.
Contrary to popular belief, don’t make trading decisions based on news. Instead, read long background articles and books. Nothing beats books for understanding the world markets.