If "the sharemarket" was a new ride at a theme park, it would be overrun by the thrill seekers and those with stomachs immune to the sudden unexpected downward lurches and the equally awesome climbs to the stratosphere.
Surrounding the ride would be those of us that have a better grasp of mortality - happy to smile indulgently at the insanity of those on the ride - but not getting on it for any money.
It's easy to weigh up the pros and cons of taking such a ride - after all it's right in front of you, as is all the information you need to make a choice that suits you. Hop on, or sit on the sidelines.
Unfortunately, decisions about the real sharemarket are not so easy. Every man and his dog has an opinion, getting to the basic facts is more difficult, it's often not driven so much by logic but emotion, and overwhelmingly people rely on the media to form the basis for their decisions.
It is worth remembering that the media is ultimately a business that needs to sell its product. To that end, they want to grab your attention, and the best way to do that is to sensationalise everything. I didn't see any headlines in great bold type saying Rio Tinto reports record first half earnings of $7.8 billion, up 35% on the 2010 first half although they did.
It's easy to weigh up the pros and cons of taking such a ride - after all it's right in front of you, as is all the information you need to make a choice that suits you. Hop on, or sit on the sidelines.
Unfortunately, decisions about the real sharemarket are not so easy. Every man and his dog has an opinion, getting to the basic facts is more difficult, it's often not driven so much by logic but emotion, and overwhelmingly people rely on the media to form the basis for their decisions.
It is worth remembering that the media is ultimately a business that needs to sell its product. To that end, they want to grab your attention, and the best way to do that is to sensationalise everything. I didn't see any headlines in great bold type saying Rio Tinto reports record first half earnings of $7.8 billion, up 35% on the 2010 first half although they did.
Take the headlines with a grain of salt, consider carefully well balanced non sensationlist articles, and seek some professional advice - you'll be surprised at how much more there is to the story.
Kerrianne Hebinger
Financial Planning Essentials
w: www.finplans.com.au
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