What the sub-prime crisis has taught us is that traditional economic indicators are poor predictors of a stock market trend. One of those indicators is the news. It will increase emotional reactions among investors but it will not predict stock market trends. For example: at 9:30 AM on Tuesday, Sept. 1, the markets opened higher. At 10 AM on the same day, two influential U.S. economic reports came out: the ISM Manufacturing and Pending Home Sales indexes. Both were positive. At 10:32 AM on the same day, an Associated Press headlined story said:

Stocks up on manufacturing data

• News expounded that the manufacturing industry has grown for the first time in 18 months, giving the stock market a boost.
• An index of pending home sales rose in July for the sixth straight month. Following the reports, the Dow Jones industrials were up 53 at 9,549.

Oops! On the same day the DJIA lost all gains and slid 160 points lower.  A new headline from the same media source said:

Stocks fall after manufacturing, housing data

• Stocks fell sharply Tuesday, giving up earlier gains.
• Investors were expecting the improvement, and many may have decided to take some money out of the market, playing it safe ahead of the government's August employment report, which comes out Friday.

The news looked good, but what happened?

Similarly, the TSX Composite Index rose to a high just over 11,000 on August 28, 2009 and two trading days later, on September 1, 2009, it dropped to 10,665. And just three days later, on September 4, 2009 it rose back as high as 11,017.

Was the reason for the dip on September 1 due to some sudden “profit-taking” by very cautious investors, once the market hit 11,000—a repeat of August 6 to 11, 2009? Most investors can't give you an answer, but they can tell you that the market did move back up and retrace the loss quickly by September 4.

This little street booya! is how investment fund investors are influenced by the news during emotional swings created by the combined news media. Media gets bits of news out quickly, but misses the overall big picture, that markets will rise and fall, in this case down, and back up in two three day periods appearing as a roller coaster ride to the average investor.

Investment fund management

Professional analysts are trained to look at trends in the markets and can allocate proper buying and selling of a investment fund's securities. News stories are always one step behind the market, never ahead of it. Media is as fickle as the wind; securing information that is changeable over the span of often only a few minutes.

Over a longer term, the media information revealed similar glitches as it spanned from mid-2007, when investors heard that the US DJIA topped out amidst a "goldilocks economy". However the sub-prime mortgage crisis storm blew in; and after the market bottomed out in March 2009, we heard that "fundamentals" were horrible. That's the way media works, and few investors can trade investment funds based on empty theories that the news delivers from day to day. That is precisely why we need investment fund managers to help repair investment portfolios and build our wealth back to the highest possible potential again. They can mitigate the fact that the markets respond to psychological movements of the masses who are touched by the media.

They will daily employ technical analytics such as Elliott Wave Theory, SMA, EMA, Money Flow Index, MACD, Relative Strength Index (RSI), and trade volume. Since we face a tough economy, most Canadians will need some experienced professionals to help us restore our  wealth and achieve financial success.