Can Watching Television Make You Rich?
The feature story title of the October 19th edition of Time magazine was "Why It's Time to Retire the 401(k)." One of the stories within the overall article centers on Dennis O'Neil, and it made me ill to read about his predicament.
Mr. O'Neil is a 63-year-old retiree who, according to the magazine, has $500,000 in a 401(k) plan and is drawing $75,000 per year to spend on living expenses. Mr. O'Neil realizes that at this rate of withdrawal, his money might not last the rest of his life.
"Unless. . .he can make something happen in the stock market," the article says.
So to make something happen in the stock market, Mr. O'Neil "studies the market" by watching CNBC every day. "Right now, I want to know which part of the economy is going to recover first," he said.
In the preface to The Naked Portfolio Manager, I implore people to ask the question, "What evidence is there that a particular investment approach works?" So I respectfully but emphatically ask Mr. O'Neil, "What evidence is there that you can beat the market by watching television?"
To be a successful investor, you must learn to make good decisions. Chapters Four, Five and Six of The Naked Portfolio Manager explain the psychological reasons why it's so hard to make good investment decisions. Watching financial TV shows without a rules-based mechanical process in place makes you vulnerable for recency error, availability error, group think (discussed in Chapter Four) as well as a host of other thinking biases.
If you are reading this blog and you know Mr. O'Neil, would you please give him a copy of my book?
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