Decoding Wall Street Headline News: Not a Trick or Treat

For hundreds of years, doomsday soothsayers have been continually flooding us with their predictions on everything from the direction and strength of the stock market to the outcomes of Presidential elections and professional sporting events.

The words and images they paint can move people to make personal decisions well before an event has even transpired.

“Double, double toil and trouble. Fire burn, and cauldron bubble,” is one of the most popular lines in English literature written by William Shakespeare.

You can picture the three Scottish witches going about their business -tossing poisoned entrails, eye of newt, toe of frog, and such, into a bubbling cauldron while expecting a visit from Macbeth to tell him about his future.

Getting advice today may not be any better quality but provided on improved equipment.

Just this past January we had experienced the worst start to a calendar year on record for Wall Street, as plummeting oil prices and an unstable Chinese economy produced worldwide tremors with the DJIA index down about 14% in eight months.

While not witches or warlocks nor utilizing potions, tarot cards or magic, the Royal Bank of Scotland at the start of the year warned investors to “Sell everything- to protect themselves from a “cataclysmic” time ahead,” while JP Morgan noted that the “U.S. economy is “steamrolling” toward a huge recession.”

A month later the US markets began a 19% robust ascension before hitting the BREXIT hiccup. Had you listened to many of the fear-mongering reports and “cashed out” of the markets in January, you would be kicking yourself right now.

While access to information  24/7 can make you a better investor, data- overload combined with your own emotions of fear and greed can be catastrophic to your financial health over time if you act on short term news- like overconsuming material on dieting (a crash diet), especially if you are not an expert in either field.

Behind the Wizard of Oz Curtain 

Don’t ignore the “show business” aspect of the financial news streams whether on TV or the web, no different than the excitement, shock and awe of meteorologists reporting on an approaching hurricane like it’s the Super Bowl event for the year. Exercise restraint. Don’t get over-excited and take action with every story.

Consider that many financial news programs, their hosts and the people they are interviewing are as concerned with their ratings, appearance, product placement and advertising ROI (return on investment) in as much as what they are saying. 

Just because you hear about the increase in gun violence in a news story, you may not go out and buy a handgun and bullet proof vest to wear to the mall. This is no different than restraining yourself from taking short term action with your investments after watching exceptional doom and gloom market reports.

Excitement and sizzle sell ratings for the financial -news shows in as much as any other topic. It’s amazing to watch the financial pundits excitedly argue for hours whether interest rates will trend up or down, how a Trump Presidency may affect the markets or reports on each 100-point move of the DJIA index like they are watching an NFL game.

“Consider that the majority of the time most financial expert’s predictions do not come true. The stock market, like hurricanes, elections and fashion trends can only be reliably predicted if you have a working crystal ball.”

Economist Edgar Fiedler noted that “he who lives by the crystal ball soon learns to eat ground glass.

Like meteorologists on the weather channel, financial pundits make many incorrect assumptions or take credit for any half- baked commentary they may have made before a major event transpired.

Where to Go for Quality Financial News

When peeling back the onion of all the Wall Street headline news, consider that volume does not equal quality. Do not assume that there is an impartial world of news on investing out there to draw upon from the financial reports on TV to the 24/7 news feeds on social media where everyone looks and sounds like an expert.

Financial literacy and achieving investment success over time takes work, education and energy on a regular basis to separate the credible and relevant investor news and media reports from those that appear to be playing up  the stories like Kramer yelling at the camera to buy or sell a stock or sector based on his opinion.

Similar to  working on a fitness routine at a gym, by consuming an abundance of financial news & information every day, you may, overtime build up some resilience to discern relevant news and information from a sea of useless or even caustic data and reporting.

When deconstructing the 24-hour financial news cycle, utilize qualified news and media resources and sites that experienced financial advisors and investment managers are contributing on and following each week such as the Wall Street Journal, Morningstar, Market Watch, Forbes, The Economist, CNBC, Time, Money, Kiplinger and Seeking Alpha.

Also consider to read quality books and magazines on personal investing and attend a qualified financial education workshop sponsored through your employer benefits program or local university or library to help increase your financial knowledge. 

Finally, consider to retain an experienced, accredited financial advisor to help you develop your own disciplined approach to wealth management and planning for the long run. 

For more information on our firm or to request a complementary consultation please email [email protected] or call (561) 210-7887 today.  Follow Jon on twitter @jonulin.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. 

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Loss of principal may occur.   

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly

No strategy assures a profit or protects against a loss. Investing involves risks, including possible loss of principal