This post FED SHOCKER: “News Noise” Crushes Stocks… appeared first on Daily Reckoning.
It was another quiet day in the markets.
That’s when all hell broke loose…
The major averages were humming along yesterday. The Nasdaq Composite even notched a new all-time high.
But everything started to fall apart just after 2 p.m. The major averages suddenly dropped deep into the red. As MarketWatch notes, it was the biggest one-day reversal for stocks in more than a year…
The market’s slide began after the Fed minutes revealed some members believe stock prices are too high.
Is this the real reason the market took a hit Wednesday?
We’re not so sure.
Instead of getting bogged down in Fed gossip this morning, I’m going to tell you a story about a famous financial writer who discovered a unique way to tune out the “news noise”.
You may have heard of Joe Granville. Joe was a larger-than-life character in the investment world.
Joe was a showman. He’d start his speaking engagements by springing out of a coffin, or by wearing an Elvis costume. Once, he stunned an audience at a Phoenix, Arizona hotel by walking across the surface of the hotel’s swimming pool.
(In reality, Granville had the hotel staff rig a plank for him to walk on just below the surface of the water.)
But Granville’s biggest feats were his market calls…
“Despite all the flair, he was a serious market analyst who created some original technical indicators that are still used to this day,” my colleage Jonas Elmerraji explains. “Studies done since Granville retired his market letter showed that his early market calls to predict the Dow Jones Industrial Average actually beat the market by a statistical meaningful margin over the decades.”
Because of that accuracy, investors far and wide hung onto his words.
At his peak, Granville was attributed with causing major market moves in the Dow as readers flocked to follow his advice…
“On Monday, April 21, 1980, for instance, Granville shifted his market call from 100% bearish to 100% bullish – it was such big news at the time it landed him on the cover of the New York Times,” Jonas continues. “When the market opened, it gapped up more than 4%, a move so large that trading was suspended.”
That influence got Joe audiences with presidents, CEOs, and the media.
But I’m not here to talk about Granville’s larger-than-life personality, or his boisterous market calls…
You see, old Joe still has an important lesson to teach us today. And it all comes down to his TV.
Later in life, Joe moved to Arizona, where he continued analyzing the markets daily. There was just one problem – where to find live stock quotes to use in his work. While the internet had emerged as a valuable tool to deliver real-time market data, Joe wouldn’t have it. You see, Joe was worried that the government was watching him, so he refused to use a computer.
(Given the number of U.S. presidents Granville had met over his lifetime, maybe he was onto something.)
So instead, he bought a …read more
Source:: Daily Reckoning feed
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