Efficient Markets Work: The Media Feed

An efficient market is just that: Efficient. It comes with the belief that all known facts are already represented in the current price. If a company has a new product coming; it's already in the price. If a manufacture discontinues a product; it's already in the price.

What does that mean? It means there are no hidden tidbits, or hot stock tips; everyone has equal access to all information. There was a time where information was available but you had to be in the know to find it. We now live in the information age where it's all a Google search away. There is an entire world of consumers who are "plugged in", and looking for the next hot tip. This has lead to the next phenomenon, "MARKETING".

You might wonder what marketing has to do with the stock market, or how the flow of information regarding stock prices is effected by marketing. The myth: the news reporting hubs (be it online, in print, or televised) are selling information. The truth: They are selling marketing spots. The big question is, "How many viewers could I deliver if you wanted to advertise on my TV program?" This has lead to flood of entertaining "investment programs", where the rating of viewership is more important than the actual information. They bring in the talking heads to argue and yell, they bring in outlandish "experts" to make stock selections and market predictions. They give entire programs to guys with funny noise buttons who will scream and yell and get red in the face. Anything to get you to tune in. The information has been lost.
It's simply not possible to know everything there is to know. Efficient markets are just not that complicated, yet people continue to disagree. The fact is that there are too many variables and too much information. No one can (or should) keep up with it. The Coached investor knows what is important. don't reach for all the information, grasp the right information.

My advice: Trust that free markets work and stay away from the talking heads and their stock picking. Unless you're looking for a laugh, then the guy with the funny noises tickles me from time to time. (Is he for real?)