With all the volatility and uncertainty that’s returned to the market in recent weeks, it would be easy to fall back into panic. On Thursday, May 6, financial TV channels showed endless loops of a few Greeks protesting in the streets. To the networks’ delight, police in riot gear were challenging the protesters.
I say “of course” because such images play right into the agenda of the media, which is to frighten you.
Here’s an excellent article by Alexander Green on this very topic. He actually goes on to address the bigger issue of using television as a substitute for real life — and I agree with that, though it’s a longer discussion for another day.
For now, it’s worth focusing on his point about the financial media. He writes:
“[T]he unstated premise behind these shows — which exist, of course, to sell advertising — is that investors should be in a near-constant state of reaction:
“The market is hitting a new high today. What should investors do now?”
“The Fed has left interest rates unchanged. What should investors do now?
“GNP was up an unexpectedly strong 3.8 percent last quarter. What should investors do now?”
What should investors do? In every one of those examples, nothing. Every little piece of breaking news doesn’t require another gyration on the part of individual investors. Can you imagine if you reacted to all the so-called advice spewing from these talking heads?
The financial media rely on your not paying attention enough to think for yourself. And that’s unfortunate, because by focusing on doom and gloom, a lot of Americans missed out on a very powerful market rally that began in March 2009. Letting yourself be frightened by the media literally costs you money. Meanwhile, they’re continuing to sell ads and make money.
Here’s an example of letting yourself be frightened, without acknowledging the facts: The other day, on a plane, I overheard a conversation between two other passengers. Both were saying they took all their money out of the market awhile back, and hadn’t gotten back in.
I felt sorry for them. They probably sold their stocks at a loss during the panic of the bear market in 2008. But by not understanding that a new rally had taken hold, they completely missed the big uptrend of the past year. The average person on the street has been hoodwinked by the mainstream media, and doesn’t realize the Nasdaq has gained about 80% in the past 14 months — even including the big pullback in the past two weeks!
So don’t let yourself be trapped by media panic and negativity. It makes money for them, but can be costly for you.
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