Tales of a Technician: How to (Not) Use News
May 11, 2016
Once upon a time there was a man named William Shakespeare, a writer of some renown. While he never fully engaged in the trading game he left all sorts of investment wisdom in his wake. It’s his thoughts on news that I find of particular interest. They were on full display in Macbeth. In Act 5 Scene 5 a budding trader asked him how important economic news was. Said trader was a budding news junkie and wanted to make sure all his toil would indeed increase the profitability of his financial ventures. Listen to Shakespeare’s response:
“it is a tale, told by an idiot, full of sound and fury, signifying nothing.”
Well said, Billy, well said. I couldn’t have articulated it better myself.
Perhaps you’re wondering what the news is good for. Spinning a tale, that’s what. Crafting a narrative to pin a cause on the effect. We humans have to know why something happened. It’s embedded in our DNA. Why did oil go up today? Why did stocks slide? Why are bonds booming? Funny thing is the only true answer to such questions lies with supply and demand. They’re the true culprit. Why did equities tumble? Because supply exceeded demand. Why did those bonds boom? Because demand exceeded supply.
Not satisfied? Well, curse your inner curiosity. You want to know why all those lemmings bought or sold don’t ya? How in the world would we figure that out? I haven’t a clue why the masses playing in stocks on any given day bought or sold. I’m smart, but not that smart.
Look, I like to write. It’s immensely satisfying. Do you think I can get paid to write an article explaining why the entire market or any particular company went up today and simply leave it at demand exceeded supply? No! I need 500 words. A compelling story couched in frilly language to entertain readers. So I make something up. Just like every other writer out there. We just pretend we know what moved the market by playing pin the tail on the donkey.
Bad economic report out of China? Bam! There’s a cause. Must be why Aunt Ida sold her IBM shares. Trump becomes the presumptive Republican nominee? Bam! There’s a cause. Must be why Timmy and crew piled into gun stocks. The apocalypse is a comin’.
Knowing why the market rallied or fell on any given day doesn’t make you a dime. The questions where answers pay are what and how long.
If you’re looking for something else to obsess over, if turning off the boob tube (arguably the worst nickname ever devised in the history of man for the television) leaves a void in your life, then I suggest focusing on what really matters – PRICE. Get lost in a chart, baby. That’s all you need to really sink your teeth into supply and demand.
I just simplified your life by 39.5%. You’re welcome.
Financial freedom is a journey
The Tales of a Technician series is brought to you by Tackle Trading.
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
# Sign up now for a 15-DAY FREE TRIAL #
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses, and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involve a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax, and accounting advisors, to determine whether such trading or investment is appropriate for that user.
Many thanks for simplifying my life! Great article. I think it applies to more than just trading sometimes.
Love it Ty!! Love it!!
Thanks Tyler
Great read, Tyler. The picture in the comic strip looks like Gino’s workstation–difference being Gino’s monitors are displaying charts and market internals instead of news
Thanks Tyler! You just relieved my news anxiety.
On any given day you can find contradictory news about almost anything. Our need for understanding coupled to our tendency to see things in a way that supports our way of thinking is part of why news exists. Shakespeare had it right. The news is just a distracting bunch of noise and confusion. None-the-less people react to it and if you are alert enough you can predict what “the masses” will do based on news reports. No doubt someone with deep pockets has or will use big data mining to design a news trend aggregator to send signals to their trading software.
Let me know if you have this going for you yet…
Think you hit the nail on its proverbial head.
Tyler, great stuff! I love a good laugh and therefore I look forward to your witty posts. keep ’em coming!
Thanks Tyler fun read lots of laughs
That’s just another value of becoming the Tackle Trading members. My life just simplified by 39.5%! Before Tackle Trading, I used to spend 2-3 hours reading the news! LOL
Thanks Tyler!
News junkie here, and I had to laugh at myself! Thanks Tyler for your insightful humor.
Thanks for the simplification. I needed it.
as always very interesting. and a hard habit to break