Does the financial news media help or hurt investors?

I am of the opinion they mostly hurt investors.

Let’s just take a look at some headlines from 2016 and I will also put the value of the S&P 500 Index* next to each one for that day…truth be told I could take headlines from every week going back 30+ years and you would see the same things.

Could The Economy Tank In 2016 (Politico.com – January 3, 2016) – S&P 500 closed at 2043 points

US Recession Cries Get Louder (CNNMoney.com – January 26, 2016) – S&P 500 closed at 1903 points

Zika Virus A Global Health Emergency (NYtimes.com – February 1, 2016) – S&P 500 closed at 1939 points

Business Bankruptcies May Double: “The carnage is going to be terrible” (Dallasnews.com – February 19, 2016) – S&P 500 closed at 1917 points

And then things get real crazy…

Brexit Slams US Markets. SELL! (cnbc.com – June 24th, 2016)  –  S&P 500 closed at 2037 points

The Summer of Selling: Brexit Slams the Dow Jones (futuresmag.com – June 27th, 2016) –  S&P 500 closed at 2000 points

And where are we now as of 9/26/2019 –  S&P 500 closed at 2977 points

So, from the start of 2016 to the day I am writing this the S&P 500 index is up 45.72% – not counting dividends.  But what did the media try and do every step of the way – Scare the you know what out of you.  Did the market go up and down since the beginning of 2016?  Sure.  Is that abnormal?  Absolutely not!  It is completely normal.

The real question I am trying to get people thinking about is: why does the media do this, day in and day out?  Are they bad people?  No.  But they are people and they are in business to make a profit.  Nothing wrong with that, but just remember what is going on when you watch or read the news.  They know BOLD statements get a lot more eyeballs than “the market is up (a lot) today or down (a lot) today or didn’t move too much today and this is perfectly normal and to be expected so don’t worry and get back to your lives”.  They can’t say that.  If they did, who would tune in day after day or buy their magazine, newspaper or investor report.  And if nobody was watching, reading or buying then they couldn’t sell advertising which is typically their main source of revenue.

Again, they aren’t bad people.  They are just trying to get as many people watching or reading so they can sell more advertisements and make more money and boost their ratings and on and on it goes.  They are not there to give investment advice and make sure you reach your financial goals.  They are not there to guide you on saving for your kids or grandkids college.  They are not there to make sure you can retire someday.  They are there to sell advertising and keep eyeballs attached to their stuff – to sell more advertising at higher and higher prices.  Again, nothing wrong with that.  Just be forewarned that the headlines and “experts” they bring on are there for ratings, first and foremost.  And scary predictions sell more than the simple truth.

The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S. Please note an investor cannot invest directly in an index.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.  This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security.  Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 2486627/DOFU 8-2019