CNBC has one goal: viewers. They don’t care if they bring value to their viewers as long as their viewers continue to watch. I’m talking about the network itself. I’m not saying the people there don’t want to help their viewers, but their job is to get people to watch, not improve investment results. I believe Jim Cramer, at least in part, wants to help the small do-it-yourself investors, even though I think his show and his methods do nothing to help the majority of small, individual investors. Individuals really wanting to learn investing would do far better to read Graham’s Intelligent Investor and Greenblatt’s The Little Book That Beats the Market if they truly want to improve their results…. but that’s a topic for another time.
Back to CNBC: today I saw Mila Kunis, a Hollywood actress telling CNBC that she is now moving her money from cash into stocks. I immediately thought of the famous shoe shine boy who was giving John D. Rockefeller a stock tip in early 1929. Rockefeller promptly decided that was a clue that it was time to get out of the market, or at least that’s how the legend has it.
I’m not a market timer, and I don’t use public sentiment to make investment decisions. I don’t worry about whether the overall market is high or low. I look for undervalued stocks, and try to focus on one investment at a time. It’s just harder to find them in the latter phases of bull markets, but it’s not a smart game to begin guessing the market’s moves 3, 6, or 12 months hence. But it is interesting when a Hollywood star comes on CNBC and says that she’s bullish on stocks. I don’t remember young 20-something Hollywood actresses buying stocks in March of 2009 with the Dow under 7,000. Now that we’re 125% higher, all of a sudden stocks look great….
Immediately on twitter and some blogs, I noticed many people had the same thoughts I did initially. But I thought more about it. She’s actually making a good decision to invest in stocks, if (here’s the tough part)… if she sticks with them over the long term. She’s 29 years old. If she invests even a small portion of her presumably incredibly high amount of future earnings into stocks, over the next 50 or so years of her life, she’ll make an exponential amount more than she would by holding bonds or cash.
As Buffett said in his most recent shareholder letter, American businesses will continue to do very well over time, and stock prices are tied to the fortunes of American business in the long haul.
So maybe Mila will look foolish over the short term. But if she stays invested in a cross section of quality American businesses, over time, she’ll probably beat the pants off most of the viewers that were laughing at her. Mila: read Ben Graham and you’ll do fine…