Why investors should ignore all media commercials about how to pick hot stocks Investors should ignore media commercials about how to pick hot stocks for several well-supported reasons: Advertising Influences Short-Term Attention, Not Long-Term Value Media commercials and advertising campaigns can attract investor attention and temporarily boost a stock’s price, especially among retail investors. Research shows this effect is usually short-lived, and stocks with increased advertising often underperform in the following years as the initial hype fades. This pattern is especially strong for companies with less analyst coverage and more retail ownership. Commercials Often Promote Speculative or Unproven Strategies Stock picking commercials frequently promise extraordinary returns or “secret” systems, but these claims are not backed by credible evidence. The track record of stock picking—whether by individuals or ...
Investment and economic observations by N. Russell Wayne, CFP, MBA. Mr. Wayne is the president of Sound Asset Management, inc. and former Managing Editor of The Value Line Investment Survey.