Noise

Noise is what we call the near term movements of the market (up and down) and the ensuing blabber by financial pundits and commentators.

Noise is the distraction that keeps many investors focused on the short-term when the meaningful gains the markets provide are found in the long-term.

One of our clients emailed us this amusing cartoon that depicts this point.

A trader is on the phone and tells his caller that he has a stock that could really excel. The other traders mistake him as to have said sell. So in a panic they all do so. In the next scene another trader relays to his caller that this is all madness and closes the call by saying good bye. The traders then all take that to mean buy and proceed to do just that frantically.