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Trading the news means understanding the
difference between news and noise. Bartiromo is the market news anchor for CNBC and in
this book she explains how she makes the editorial selections that separate news from
noise. These distinctions are important. Noise is just froth and bubble, but news has the
power to move markets or halt trends. She discusses the sources of news information, and
ranks them, in order of importance.
Surprisingly she ranks Government news and reports as the most accurate
and reliable because they have no inbuilt bias designed to put a positive spin on a
company report. This is not the case in Australia, where Government reports are routinely
adjusted to include or exclude factors based on temporary political advantage.
She ranks news from market professionals as more reliable than news
direct from companies, although she notes the potential for conflicts of interests with
both sources. Her discussion of reactions to earnings reports is very useful. She explains
why analysts are reluctant to issue sell recommendations, and shows how analyst reports
are used. She also considers unconventional sources, including chat rooms.
The book is based on a single assumption that people are not stupid.
The information required to make informed investment decisions is widely and freely
available. People do have the intelligence to understand the importance of news and
include it in their investment decisions. Arthur Levitt, Chairman of the Securities and
Exchange Commission notes that Investors today have enough information available to
them to make judgments without those judgment having to be screened first by securities
analysts. Australian regulatory authorities havent yet recognized this ground
If you are interested in trading the news, or using the news to
understand the impact on investment plans, then this book is for you. This is an expert
showing how she decides what is news, and what is noise.
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