Reuters Capitulates, but Don’t Celebrate

Reuters has announced they will no longer release economic data to a select group of subscribers earlier than to the rest of their subscribers. In this case, you could pay more (a lot more) and get information early.

When I say an earlier release of information, I am literally talking about 2 seconds.

Henry Blodget comments on this developing story. He basically says the downside of this announcement is that many individual investors may get a false sense of security. I couldn’t have said it better myself. Investors may feel that the waters are now “safe” for swimming. Maybe Reuters is changing their policies, but that only eliminates one shark out of the thousands that are still lying in wait to take the money from the unsuspecting family that tries their luck as an active stock trader.

If you are actively trading at home, you have no idea what you are up against. A few good trades only gives you a false sense of confidence. A regulatory victory such as this one with Reuters simply gives you a false sense of security.

Successful investing is not the same as frequent trading

But there is a huge positive side to this story, as Henry Blodget and I have mentioned. You don’t need to be an active trader to be a successful investor. Long-term, global investing doesn’t require frequent trading. Remember, it is the active trading that  is analogous to dipping your toe into the shark tank. Owning stocks and trading stocks are entirely different things. If you are simply holding on to a well diversified investment portfolio, it doesn’t matter what the high frequency traders are doing. Let them trade all they want. It doesn’t  fundamentally effect the investments you are holding.

To be a successful investor for multiple generations, you want to stay as far away from the shark tank as possible.