When it Comes to Investing, You Get What You Pay For
September 17, 2006 -
Sometimes, I’ll scan financial news on Reuters, Bloomberg, MSNBC and so on, not for information to make investment decisions, but just for ideas to write another blog entry. Occasionally I’ll find something to comment on. By now, most of you know that I find most financial news in major media to be junk. Case in point. A couple of weeks ago, Chevron, Devon and Statoil announced the discovery of massive oil reserves, perhaps as much as 15 billion barrels, in the Gulf of Mexico. Major news media commented that day that oil prices plunged in response to this discovery.
The early estimates are that it could contain as much as 15 billion barrels of oil. However, because the oil is located in deep waters, 1.3 to 5 miles underwater, the impact of this discovery may not alter oil supply significantly for another decade or perhaps not even until two decades or more. So are people really stupid enough to let a discovery that won’t significantly impact oil prices for perhaps 20 years out in the future significantly affect the price of oil price futures today? I believe the answer is yes. So many people today do not want to put any effort into their investing. They make ludicrous decisions about where to invest hundreds of thousands of dollars based upon ten-word headlines and 15-second soundbites.
Though you know by now that I am relentlessly critical of the financial media for leading investors astray, today I will actually give them credit.
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