In a move that would seem counterintuitive, WSJ reporter Jason Zweig explained how journalists actually hurt investors by fueling bubbles that quickly burst. People who receive frequent news updates on investments earn lower returns than those that don't receive any news, Zweig pointed out. Morningstar's John Rekenthaler provided Zweig's 14 steps of media-fueled asset booms and busts.

One of the notions Rekenthaler latches onto is that good investors zig when everyone else zags. One beneficial type of contrarian thinking is not to buy that which is popular. It may not profit the investor to stay away from that asset but it can spare them big losses. Buying that which is unpopular is harder. You have to know whether or not an investment is opportune because it is neglected or because it is inferior. As Rekenthaler says more colorfully:

Yes, the time to buy may be when the blood is in the street, as Baron Rothschild famously said, but sometimes the blood flows because the asset is deceased.

To read the entire column and Jason Zweig story, click here and here. 

Edited by: Casey Quinlan


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