Did that headline make you click? Of course! I thought I’d share a spooky (? Ok, interesting) story on the media’s cause/ effect relationship on market volatility.
Back in 2010, the channel CNBC decided to address nerve-wracking market activity with a special called “Markets in Turmoil.” This show was meant to discuss the causes of the volatility for concerned viewers and help them understand what was happening.
However, in some cases, drawing attention to the choppy market environment caused more misunderstanding and alarm and led some investors to panic-sell.
This was a costly mistake for long-term investors! The data shows that on average, the S&P 500 return for the 12 months immediately following the airing of a “Markets in Turmoil” special was 40% as of 2022, historically positive 100% of the time.
In fact, some people now consider these specials to be a clear signal of a buying opportunity.
A market analyst named Charlie Bilello put together a chart on this phenomenon, down below.
The conclusion is always the same, and it is mercifully simple: those who stay invested build wealth over time, those who cannot, will not.
The media has no knowledge of your investment experience, financial situation and goals, and care even less. Information that can be dismissed as phony or irrelevant by one investor could prompt someone else to make a consequential mistake.
Sometimes media may mean well, like in the case of these specials. Other times they are sponsored by special interests, ready to swoop in to sell you their solution to the scary problem you just heard.
Either way, always keep in mind (and remind your loved ones) that media is a for-profit enterprise designed for clicks and eyeballs, in the historic tradition of “if it bleeds, it leads.”
Their job is to entertain and create content, not to help any individual pursue a life of financial independence. That is what your advisor is for.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. Chart from the Charlie Bilello Blog.
Securities and Retirement Plan Consulting Program services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Investment Advice offered through Western Wealth Management LLC, a Registered Investment Advisor. LPL Financial, Kennebec Wealth Management LLC and Western Wealth Management LLC are separate entities.