Truth, Lies, and Investing In Stocks

By | November 2, 2020

Tomorrow is election day in the United States, a good day for discussing information. Information is plentiful these days. Some is truth, and there is only one set of truths, there are no alternate truths. Some information is opinion. Some is an interpretation of what the truth means (spin). And some is downright lies (misinformation).

While financial statements can be a little distorted, they are the closest we have to factual information about a company. Almost everything else is opinion and noise. Now every once in a while there will be a news story about a company that contains factual information that is not financial in nature. I guess it would be up to you to decide how important it is within the scope of the company’s finances.

Let’s talk a little about how to decide whether something is factual, because these days it is a little difficult to tell the difference sometimes. The big news medias CNN, ABC, CBS, NBC, FOX and such usually report factual information in their stories, though the stories will often put their own spin on the facts. Such as A=B means Y. Usually Y is different depending on who you are listening to but A and B should be the same.

Any other news you read through social media, online, in the tabloids, or on a flyer should be suspect. If you care about what you are reading, usually referring to Factcheck.org or Snopes can help you determine whether something is actually true and factual. There are people out there trying to deceive and will post inflammatory articles that have no basis in fact. Just because you agree with an article doesn’t make it factual. Dig deeper.

The information we use to evaluate companies is super important, that’s why we turn to company financials. It is what it is, no doubt about it. Rumors and opinions about a company mean very little. Even the big players have opinions that turn out to be wrong. Go with what makes the most sense when trading stocks.

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