Wall Street Steward Blog

Forget the Media, Learn the Facts

Is the market good or bad right now?  Seriously, answer the question for yourself.

From my seat, the majority of the people I have spoken to say “BAD.  Horrible. We have 14 trillion in debt.  The US dollar is de-valuing.  The real inflation rate is high, and because of that, interest rates are going to rise.  The market is overvalued.  Home prices are falling.  There are foreign countries that are raising rates/threatening defaults.  Oil is at $110/barrel and gas is 4 bucks per gallon.”

I agree with everything they said, except the part in bold.  The market has performed incredibly for the past 2 ½ years.  From the beginning of 2009 until today, the S&P 500, for example has done quite well.

Don’t believe me?  Okay, I will prove it.

S&P 500 Index Total Returns
2009:  26.46%
2010:  15.06%
2011 through 5/17:  +6.44%

Believe me now?

The question I have is “why?”

Not “why is the market is up,” I can explain that…but WHY does everyone think the market is BAD?

My guess is the media.  If it bleeds, it leads.  Negative, “doomsday” news is what they are selling, and the American public is buying.

There are always reasons for the market to correct.  There are always reasons for it to increase.  Most of time, a compelling case can be made to support whatever your outlook might be.

I think this is a good thing.  I once heard a strategist say “the market’s job is to make the most amount of people look stupid…all at the same time.”

When everyone is positive, I tend to be negative.  When most people are negative, I lean toward the aggressive side.

However, no matter if you are BULLISH or BEARISH, please do not ever let the media influence your market opinion.  Either ask your advisor, or do your own research, because if you rely on the media, you may find your opinion to be involuntarily swayed.

So, the next time you attend a cocktail party and someone says “man, this market sure is horrible.  Can you believe this,” feel free to light them up because the FACTS are on your side.

Creative Commons License photo credit: evelynyll

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.