I have created Google Alerts for all the stocks that I own. If there is news about them somewhere on the web – I want to read it. Usually, no news is good news and when I get an email about a stock I own — it is often bad news.
I have always felt that sad and depressing news does better than good news. That’s the reason newspapers are covered with news articles about accidents, scams, robberies etc.
I think that this is true for stocks as well and I have seen that this influences people in a certain fashion. I know a lot of people who bought AIG, Citigroup, Goldman and other financial stocks — right at the time when they were doing badly.
Since these companies were doing badly — they got quite a lot of media attention — and that led to many people thinking about these companies and wondering whether they should buy their stock.
Eventually, a lot of these people did end up buying these stocks because they thought they were trading cheap relative to the bad news surrounding it.
Most people don’t subscribe to investing and business magazines to discover stock ideas, so the way they discover stocks are through newspapers and TV. Newspapers and TV usually lean towards covering bad news and hence a lot of people get into stocks that are surrounded by bad news. This may just be reinstating — any publicity is good publicity, but I think it works in stocks.
Have you seen such a thing happen with stocks?
@Adam — Thanks for the link, I like the idea about creating an alert about your Mutual Fund Manager that you talk about in your article.
@Dana — I find the article very interesting, I didn’t know such a thing was going on in Germany.
Yeppers, good news sells and especially in times like this, pessimism porn is everywhere. I know this is almost heresy to say, but too many people are invested in the stock market. As clearly demonstrated by this crash, most cannot afford the risks associated with a dip as severe and (possibly) lengthy as this.
But then again, Americans are famous for stomaching risks. Many can’t and don’t invest in the stock market. So in times like these, they can sit on the patio and sip their beers ( http://www.newsweek.com/id/193506). Price to pay for prosperity and crap times!
Setting up Google Alerts for the stocks you own is just the start. You should also be tracking the names of the CEOs. You can also set up news alerts for the major products of each company and words like recall, fraud, or investigate. I’ve written up the details on a lot these Google Alerts on my blog:
http://www.alertrank.com/mrgooglealerts/2009/03/17/tracking-your-investments-with-google-alerts/
I hope you find these useful.