The Bogleheads' Guide to Investing, 2nd Edition

Chapter Eighteen Tune Out the “Noise”: It’s Almost Always Wrong

A fake fortuneteller can be tolerated. But an authentic soothsayer should be shot on sight.

—Lazarus Long

Welcome to the age of the investor class. In 1980, very few Americans owned stocks and only 6 percent owned mutual funds. Today, over half of all U.S. households own marketable securities in one form or another. It has been the single greatest financial change in U.S. households in the past quarter century and has created an enormous new market for financial products and services.

As you might suspect, this new investor class has an enormous thirst for investment knowledge. As a result, the number of media outlets dedicated to investing and money management has mushroomed. We have 24-hour radio and television networks, newspapers, books, magazines, newsletters, and Internet websites, all churning out an endless stream of material—some of it useful, but much of it dangerous to easily influenced investors.

Whether it’s newspapers, TV, radio, or the Internet, all media have one primary goal: to attract and hold an audience. That’s the key to making money in a media business. The media make money either by charging the audience and/or by selling advertising. Assuming they attract a large enough audience, media outlets charge advertisers handsome fees for allowing them to promote their wares. If the advertising proves profitable for the advertisers, it’s a win-win for both parties. However, when it comes to investing, ...