The Only Three Questions That Still Count: Investing By Knowing What Others Don't, 2nd Edition

Discounting the Media Machine and Advanced Fad Avoidance

You may be tempted to ignore the media altogether since what you hear or read is likely wrong or already discounted into current prices. There is some rationality to that view, but it’s wrong. By all means, don’t avoid mass media—it’s your friend and ally on your quest to invest by knowing what others don’t. The media is a discounting machine—you must read (watch, listen to) the media to know what everyone else is focused on so you know exactly what you can ignore and look away from to focus elsewhere.

Whatever they’re fretting, you likely needn’t because they’re doing it for you—a service—and you don’t even have to pay them for it. Such a simple concept is very hard for tribal-oriented humans to get. But anyone can train themselves to do it.

For example, I’ve already told you the collective histrionics regarding the so-called budget and trade deficits are typically misguided. You may not believe it, but I’ve told you. You also know pretty much everyone misinterprets high P/Es. (We debunk more ubiquitous myths in later chapters, but you get the idea.) Paying attention to what the media covers and consequently discarding what is irrelevant will prevent you from being trampled by herd mentality and let you begin fathoming new paths.

Avoiding being trampled by the herd sounds easy enough—look where they are stampeding and get the heck out of the way. However, if it were easy, it wouldn’t be called “herd mentality.” It would ...