20240318 Slowing Down the Business News Cycle

Slowing Down the Business News Cycle

A news cycle is traditionally defined as the period between when you get the latest information and what your reaction is to that information. When I started my career, the news cycle was daily. The information you needed was delivered in your daily newspaper. One would read the print edition of the Wall Street Journal and find various bits of news that would affect stocks and bonds, and investors could make decisions based on their conclusions. But in today’s digital age, the news cycle is measured in milliseconds. This can create confusion for investors.

The news cycle in the 1600s was an exceptionally long time. Sailing ships that carried information might take months to go from port to port. The Pony Express in the 1860s shortened that to weeks. Nightly news in the 1950s and 1960s gave us 30 minutes daily of all we needed to know. In 1980, with the launch of 24 hours a day news, CNN allowed us to see what was going on around the clock. Today, it is estimated that 90% of the world’s population has a camera-based smartphone. Imagine six billion reporters on the earth capable of instantly sharing news stories. What is the business news cycle today? It is constant. So, what can investors do about it?

Many investors are recognizing that this barrage of information in a constantly changing world means no mere mortal investor can analyze all the data. Those investors are turning to algorithmic models to help make their decisions. But given the nature of these products, it would seem the term “investor” is being applied loosely; the term “TRADER” is more appropriate. In fact, in a world where information is changing instantly, are all investors becoming traders?

Just this week, the market got the following major US economic information: Consumer Inflation Expectation, 3-month, 6-month, 3-year, 10-year treasury auctions, Core CPI, Real Earnings, Crude Oil Reserves, Producer Price Index, Retail Sales, Jobless Claims, and Industrial Production. This is just information that came out in the US. What about similar information from every major country around the world? Following the release of this information last week, investors had to suffer through panel after panel of “market experts” as they discussed on Bloomberg TV, CNBC, and Fox News what we investors are supposed to take away from the data. Sentiment is constantly changing, and a consensus view is often muddled.

Investors should tailor their investment decisions to simpler solutions. Am I diversified? Do I understand the risks in my portfolio? And remember that discipline and patience are the virtues of an investor. Try to avoid the trading mentality that the digital news cycle feeds upon. Instead of speeding up the business news cycle, try to be thoughtful and slow it down.

Carl Gambrell