The Futility of Financial News?

Here’s another humdinger: according to Bloomberg (via BTV), Rio’s rejection of BHP Billiton’s bid has led to speculation about other mining takeovers. The news anchor then cited the rise in other “takeover speculation” mining stocks like Barrick Gold, Newmont Mining, Goldcorp, Kinross Gold as evidence of this speculation.

Let’s be clear — BHP’s bid for Rio Tinto has absolutely nothing to do with the gold mining stocks. Oh, Bloomberg, BTW the price of gold is up $15 today so that and yesterday’s irrational selling may have something to do with the pickup in GOLD MINING STOCKS. Diversified miners like Teck Cominco, Lundin Mining, Vale are down to slightly up but nowhere near the bump the large gold miners are seeing.

Earlier, Kathleen Hayes on Bloomberg asked some economist from Greenwich Capital or some such place what had happened that caused everyone’s economic forecasts to be so wrong? The response was that a year ago, no one foresaw the massive problems in housing and the Fed’s aggressiveness in cutting rates was unexpected. This is complete and utter nonsense. Obviously, this hack was just covering his ass but this situation had been discussed quite clearly for sometime before Mr. Market finally noticed. I remember seeing the mortgage Implode-O-Meter in late 2006 when there were only 5 casualties.

A little secret: when I decided to truly take control of my finances, I originally targeted real estate. I got a whole stack of various real estate books and researched the local market. That’s when I discovered that it just didn’t make any sense. So real estate was nixed and now I’m in the financial markets for now.

But my point is that the housing bust and the financial fallout & Fed reaction should have been easily anticipated by anyone even half paying attention. And it was. By many people.

Maybe financial news isn’t futile but you’ve got to read everything with a very skeptical eye. And find smart people with sound reasoning who are right most of the time and pay attention to what they say.

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