You would think that choosing your news and information source would be extremely simple since there are so many sources out there. But nowadays, getting financial news involves a lot more than just watching CNBC and reading the Wall Street Journal. There's several financial TV stations and tons of financial websites, blogs, and social media where you can get instant news, information, and opinion. These usually fall into educational, opinion and news types of sources. Depending on what your needs are, you’ll need to know which source to use for what. Most likely you’ll need a combination of several financial news and information sources in your toolbox.
What types of things should you consider when choosing where and how you get financial news and information?
- Experience. Beginners would probably consider something a little more educational driven and opinion driven, at first, when it comes to slightly more difficult topics, especially when it comes to interpreting domestic or global policies, asset pricing, or anything else that might drive a particular reaction in the market. Also, some news feeds are real-time which allows you to get information instantly for making investing decisions.
- Trading Style. Understanding your trading style is important for deciding what news and information sources to use. Short-term traders might focus on real-time feeds for information during trading hours, and analytical or opinion pieces for after hours. Long-term traders might want a slightly different perspective or outlook, so they go to opinion columns, blogs and professional mentors in order to find all angles on an investment before they make it. This leads us to the next point which is risk factors.
- Risk Appetite. For traders that are long-term, usually analysis is a lot more in-depth because even though most assets (excluding expiring assets) revert to the mean, the more time allows for increased volatility (or chance of variation). Therefore, a long-term investor’s risk appetite might lead him to look through five or six analytical pieces for a particular stock to ensure a reversion to an uptrending mean, and to make sure that he can stomach the intermediate volatility. Long term investors might use articles from widely read sources such as Wall Street Journal or CNBC.
Short-term traders are trying to find an edge over institutions and other retail investors and often choose more eclectic or independent studies for potential arbitrage opportunities or deviations from the norm. For short-term traders, instant factual information is often essential. In the modern age of digital communication, there are many free sources for instant financial news and information. For all financial news and information sources, we caution you to understand the influences, biases, opinions and even political motivations of these sources. As scams like Enron has shown, financial news and information are often used as tools to influence us, the public.
- Asset Class. Looking for tidbits in news sources that could pertain to a particular asset class is extremely important. These tidbits are not just about the stocks themselves, but also parameters from which our asset classes move. Understanding the basics of options, for example, can help us realize that if the news headline says that the market is dropping 300 points, implied volatility with respect to that period of time should spike causing a great opportunity for a bullish volatility spread. In this way, knowing your asset class’ relationship to the news, and what news sources are best at feeding you the type of information you need, is key to finding the right one for you.
- Type: News Websites, Video, Social Media, RSS Feeds, etc
- Pros: Efficient, Factual (for the most part), Great for live trading by seasoned traders, Easy to stream
- Cons: Lack of analysis, usually big media companies cover it so therefore some media bias, Informational but not educational
- Summary: News sources give you the 5 W’s (Who, What, When, Where, Why) & How but they don’t connect the dots for you. Instead, they expect you to make your own inferences or find others who can make it for you. However, this makes them extremely efficient and easy to stream from any of your favorite electronic and/or computing devices. Many modern pure “news” pieces are written by computer programs who simply combine facts and information into readable language.
- Type: Mentoring Services, Educational Blogs/Videos, Reference Material
- Pros: Great learning source for beginners & seasoned traders, basics and advanced techniques to build foundation for trading. Good information source look-up for quick how-to material
- Cons: Some material may be outdated. Often current markets and trade ideas are used as teaching examples, but inevitably the educator’s opinions may cause bias and confusion. Education is only as good as the person teaching it
- Summary: Be weary of educational (mentoring) services that promise too much or might have a lack of credibility. But overall, educational services are an extremely great way to learn different techniques and strategies for approaching asset investment. Use these for the knowledge, not as trade recommendation services.
- Type: Financial TV, Trading/Investing Media; Macro/Global Media, Live Analytical Videos; Financial Expert Blogs
- Pros: Analytical & In-depth, Builds Inferences Based on quantitative and/or qualitative observations, Connects theory with practice
- Cons: Subjective opinions, Data mining and/or historical biases, conjectures based on assumptions that may or may not be valid. Biased, limited, and often delayed commentary filtered/censored by editors.
- Summary: Great for getting analysis & point of views from others. Beginners beware of too much conjecture or “hand-waving” arguments, and seasoned traders should beware of this too for new subject matter that they are learning, but in general, opinion articles are a great way to learn and see other professionals and amateurs thought process to gauge your techniques and tune your own strategies.