Should you follow the news in the stock market?

I have a question for you. You know, probably that every day you can find on tv, you can find online, people that are coming and telling you what is going to happen in the market, financial analyst, expert, people giving opinions, commenting the news, and they are there to give you advice, what you should do, what you should expect. Now my question, do you think that listening to these opinions can really help you become profitable? And I know that many of you will say, well it makes sense in a way because these guys have studied something that is related to finance. Most of the time they have experience, they are analysts, they have access to data we don't have and, and a lot of other reasons. But eventually, most of the time by listening to news, you will just lose money. And there are a few reasons for that. Number one is that usually by the time the news is available to everyone is already priced in, in the market. So if you know the news before is released to everyone, yes, it's different, but when it's available to everyone, usually is already too late. And number two, that is even more important is that people that are trying to predict the future in the stock market, usually they are not profitable, they cannot consistently be profitable. And I want to give you an example with the recent case of the coronavirus for which I made recently a video where I was discussing the impact on Singapore. Not from the stock market point of view, but mostly from the behavior of people point of view, how people were reacting to that. And you can find the link here on top. Now the virus of course had an impact on the Chinese market. So today I want to analyze with you two ETFs that are tracking the Chinese market. One of them is kweb, that is tracking the Chinese companies Internet related. And Another one is ASHR, tracking the 300 largest and most liquid Chinese companies on Shanghai and Shenzhen exchanges. So as you probably know, in January the news of the coronavirus was spreading. It was getting clear that the situation was quite serious. And as you can see here, the market went down. Well yes, that was expected, especially because the lockdown is affecting companies in China because people were not allowed to go to work for a while. Right? And if you want to quantify this drop, here we are around mid January and then we went around minus 16%. And here the story is similar, minus 16. So it's true, the market went down and at this time probably you started to hear very bad news. Everyone was oh my God, it's going to be the end of the war, the crisis, the market is going to crash, is going to collapse. You should sell your shares and all this kind of news, and I bet many people did, especially when you start to see for a few days the market going down, down, down. Well, if you let fear and you listen to the news, right? You let fear affecting your trading and investing, then you will just sell out of panic. And the same here you see big red candle, another one and then another one and then you sell. Maybe, but look at what happened after that. Well, the price went up now is almost close to the maximum before, right? So what is my point? My point is that let's say, suppose you have your strategy, okay? And your strategy is telling you that, for example, let's say a strategy based on moving averages that I think I discussed in a previous video. So what I usually do is I look at a medium term trend, at least using moving averages, these three that you see here. So if the blue line, that is the 50 moving average is above the green, the 150 at and they are sloping up or price is above the 200 sloping up, this is an uptrend. And till the uptrend is there, I should not sell. Now imagine that you are here and you are in this situation where the news are released. What you should do? Well, if you follow the strategy, you should not sell. Why? Because the trend is still up, right? And if you sold, let's say that you sold and then probably you sold at a very bad price. Now you are regretting because the price went up, right? But of course, if you listen to all this bad news, then you may feel uncomfortable, you may feel that you're going to lose more and more and more free fall. So I need to close my position to limit my losses. And who cares about the strategy because this is a different situation. However, the secret to be consistent is to consistently follow your strategy, not to mix your strategy with all this kind of news that are basically destroying your profitability. And why I want to mention that because now the price is going up, okay? And now again you can find people telling you that the end of the world is coming. And I want to show you this article, for example, 18 of February. So two days ago. So look at the title and tell me what you will feel if you are holding some shares. Luck may be the only thing standing between the coronavirus and the US stock market crash. Wow. If the outbreak cannot be contained by summer, a crash worse than the 2008 crisis. Remember the 2008, it was the subprime, the mortgage crisis. You know, there was also this famous movie, the Big Short that I suggest you to watch. Quite interesting. So it was a big one and now this guy is saying that the same will happen if the outbreak cannot be contained by summer. Now if you want, just for out of curiosity, you can read the article. I'm not saying that what is written is wrong or doesn't make sense, but to me saying that because of my analysis that this guy is doing, then this means that a crash is coming. Well, when I see news like that, I consider them garbage. Because nobody can predict what is going to happen in the market. Nobody. And most of the time when people try to predict the opposite maybe happen. You know, you can go back and then the Brexit and then the Trump elected and a lot of things you would have missed a really, really long bullish market kind of 10 years bullish market. If you are influenced by all the bad news happening, you basically will lose money eventually, not make money. So what is my point? My point is, number one, get a strategy that makes sense. You can find them on books, courses, you can listen to my videos. I discuss some of them. Like the one I told you about is a very simple one based on moving average. And bear in mind that it doesn't have to be a complicated strategy. That's another thing, strategies can be very simple and yet profitable. Number two, when you have your strategy, just follow the rules. Write down the rules and follow the rules. For example, here I say, well, if the trend is up, as indicated by the moving averages I should hold, when the trend is down, then I sell. The strategy doesn't say, if some random guy come and say that the crisis is coming, I should sell. Because maybe it's right. That's not a strategy, right? That's gambling. And so number three, don't listen to the news. If you know that by reading the news you will be affected emotionally, just don't even look at them anymore, okay? Because by doing that the likelihood that you lose money will be higher, not lower. And I know it's counterintuitive because as we discussed at the beginning, people may think that these kind of experts and analysts, they know better, but nobody know what is going to happen. You can analyze what happened in the past and this is very easy, you know, when something happens, is very easy to look back and try to get the explanation. And if the opposite happened, they will find another explanation. But telling you what will happen in the future, that's another story. And that's what you need to make money. And that's what you cannot do actually. So it seems to me that the way to make money is not trying to predict the future by listening to people telling you that they know the future, but rather stick to your strategy, accept that losing is part of the game and just focus on the long term profitability and that's all. So I hope this video help you and with this you can also get a better perspective of how to say the way that news can really affect you in a negative way and how to do to avoid this problem. As usual, if you have questions, if you have comments, feel free to write me and I will reply. Put a like if you found this video useful, if you like it, and also subscribe to this channel if you have not yet done so. As usual. See you next time.