As the fantasy of Oz is driven by the reality of Kansas, the investment markets are ultimately driven by real companies, real assets and a real economy, all of which are subject to very real world forces. In making investment decisions and evaluating their successes or failures, it is vital for investors look beyond the land of Oz to the real world where their fates are actually determined. There is no shortage of wizards on Wall Street. Economists, strategists, analysts, and investment gurus, who inundate television, radio, newspapers, research reports, bookstores and even the Internet with their theories and opinions about what is happening, has happened, or most certainly will happen.
Many wizards seem to have tremendous power and influence.
Federal Reserve Board Chairman, Alan Greenspan, can send financial markets reeling even with the slightest scowl or cautionary tone. A positive or negative opinion expressed by a noted columnist in The Wall Street Journal or Barron's can conjure a buying or selling frenzy in the market that may have little justification given the facts. The problem with wizards is that their opinions are often overstated, wrong, or just simply irrelevant to most investors needs and objectives. Investors should remember that most wizards are paid to come up with opinions that cause transactions to occur, such as purchases or sales of securities, research services, newspapers, subscriptions or advertising time. The stronger the opinion, the more transactions occur.