Past Performance Feeds Financial Media

OK... stocks fooled everybody in 2013 and spurted ahead over 30%. So what do we get in the media ?

•  3 Reasons to Be 100 Percent Invested in Stocks by Dana Anspach
• Some "prudent" strategies downright reckless, says Cramer by the irrepressible Jim Cramer

And so it goes, as rear view mirrorers give advice to wimpish Wallys and his ilk to get them further into the deep end.  This punditry theme extends to media interviews you see on the financial networks, popular investment books that climb the charts, and the newsletter industry.

But where were these articles in early 2009 as investors stared bug-eyed at stock portfolios down 50%?  2009 was a time when these types of articles could have done a lot of good.  Mostly they would have been ignored; but, for those who heeded them, the advice would have paid off.  Back then, though, the articles were about investor portfolios being to risky!  The media was inundated with articles on how investors should reduce risk.

Let me be clear.  I have no idea where the market is headed.  Pin me down and make me make a guess and I would say it's at the pricier end of the spectrum.  Who knows, though?  Next year this time it could be 20% higher, and  readers will think "I should have listened to Anspach and Cramer."  What I do know is that the evidence shows that thinking hard about asset allocation and sticking with it thru the ups and downs has outperformed strategies that chase up markets and panic in down markets. 

DIY investors should know that one of the first propositions that is demonstrated early on in an investment course is that past prices don't contain information on where prices will go in the future.  One place to find the voluminous studies supporting this proposition is Malkiel's book A Random Walk Down Wall Street, now in its 8th edition.

So, bottom line:  IMHO, have a well thought-out asset allocation and stick with it.