Find out why avoiding the mainstream financial media can help you protect your investment portfolio!

Wednesday: The Independent Investor FROM THE DESK OF MILES EVERSON: Happy midweek! We’re thrilled to share with you another investment tip in today’s “The Independent Investor!” Every Wednesday, we publish articles about investment strategies and insights because we believe this activity can help you attain true financial freedom. For today’s article, we’ll talk about why you shouldn’t believe everything the mainstream media tells you. Curious to know more? Continue reading below! CEO, MBO Partners Chairman of the Advisory Board, The I Institute

Find out why avoiding the mainstream financial media can help you protect your investment portfolio! Did you know that H.G. Wells’ “The War of the Worlds” was adapted for radio in 1938? Apparently, the CBS Radio Network aired the radio adaptation of the novel on October 30 of that year. Unfortunately for the broadcasting company, the “War of the Worlds” broadcast drew national attention for all the wrong reasons. Why? This is because the radio adaptation of the novel was meant to sound like a real-life breaking news report about aliens landing in New Jersey. As a result, some folks who listened to the broadcast thought it was the real deal. To make things worse, countless newspapers across the U.S. blew the radio broadcast way out of proportion. Articles published about the adaptation had sensationalized headlines like “War Skit on Radio Terrifies Nation.” Looking back, the sensationalized reporting about the radio broadcast isn’t that surprising. At the time, radio was still relatively new and posed a threat to the printed news industry, so the newspapers jumped at the chance to highlight the dangers of this new form of communication. That’s not all. What happened in 1938 offers a valuable lesson about today’s mainstream financial media. How? Allow us to explain further… Financial media companies make their money by holding their audience’s attention for as long as possible. That’s why those firms constantly pick stocks not because they’re great stock pickers or because they want their viewers to make huge gains in the market. These companies pitch stocks because they want their audience to tune in to their content day after day. Here’s an example: Jim Cramer, the host of an American finance television program called “Mad Money,” constantly pitches stock picks to his audience. He doesn’t do this because he wants his viewers to make gains or because he’s great at picking stocks. If you actually traded like Cramer, you’d be losing money. In fact, some folks have made it their strategy to bet against his stock picks… and have done so with great success. Just take a look at Quiver Quantitative’s “inverse Cramer” approach! The strategy is quite simple: Quiver Quantitative monitors Cramer’s most-recommended stocks and shorts those picks at any given time. The tactic has returned 29% annually for the past 2 and a half years. It’s no wonder that “Mad Money’s” audience went down considerably. Despite this, financial news shows similar to that of Cramer’s still churn out stock pick after stock pick with the intent of getting viewers hooked. — According to Professor Joel Litman, Chairman and CEO of Valens Research and Chief Investment Strategist of Altimetry Financial Research, there’s no definitive best source of information especially when it comes to investing. You simply can’t trust whatever piece of information you see from any source no matter how popular it is. You need to make it a point to always find out what the angle of the author of that article or research is. Even the least biased of analysts can’t prevent their opinions from bleeding into their recommendations. It’s just human nature. So, what’s the key takeaway here? You simply can’t believe everything you see in the financial media, especially when it comes to investing. When doing your investment research, make it a habit to find evidence that proves and disproves the arguments you find in the articles or other forms of content that you’ve consumed. If possible, track down primary sources like annual 10-K filings and quarterly earnings transcripts. By taking those extra steps, you’ll be putting yourself in a position to make well-informed financial decisions. Remember: If you want to protect your investment portfolio and achieve substantial gains in the market, you need to critically analyze every piece of information you encounter. Hope you’ve found this week’s insights interesting and helpful.     ROA enables analysts to look at a company’s profitability in a way that’s comparable with its peers. Learn more about a better way to look at cash flows in next week’s article!