Market Pulse: Beware the market clickbait
It has become fashionable to label any story that you don’t like as “fake news.” For the stock market, I’ve seen many articles on financial websites that are misleading, meaningless or are just there for clicks.
Here are real-life examples:
The obvious place to start is with the perma-bears that seem to make a living being wrong about the stock market. Each time the market pulls back, count on those people to appear on TV spreading even more fear while ignoring their own record.
“Get out of stocks: Gartman,” published by CNBC in December.
“This ‘prophet of doom’ predicts stock market will plunge more than 50%,” published by MarketWatch in July.
“Economist Harry Dent predicts ‘once in a lifetime’ market crash, says Dow could plunge 17,000 points,” published by CNBC in December 2016.
“Marc Faber: Can’t see another bull market in my lifetime,” CNBC published in January of 2016.
I can’t count how many times clients have called me after they read such articles wondering if they should get out of stocks.
These articles are good at getting clicks, but are not helpful for investors. The truth is there is always something to worry about so bearish arguments sound smarter. The bears can discuss the here and now.
The bulls, however, seem like they are throwing caution to the wind and their arguments are based on what will likely happen instead of what is happening now. Although the market’s long-term trend is clearly higher, bullish articles just don’t sound as smart.
The questionable headlines don’t have to come from perma-bears. On Aug. 1, 2018 CNBC ran the headline, “Tesla could see a 9% move higher or lower when it reports earnings.” Really? The super volatile Tesla stock could move higher or lower after earnings? Not exactly breaking news.
In early April an article cited the 20-year annualized return of gold saying the metal outperformed oil, S&P 500, bonds and housing.
“Imagine what gold will do in the next 20 years,” the article said, as if gold is a great investment. It’s not. They cherry-picked the date to where stocks were at their peak and gold had just finished a bear market. If they looked at the last 25 years they’d see that stocks were up 7.8% annually while gold was up 4.9%. If you look at the last 10 years you’d see stocks up 13% and gold up 3.6%.
Instead of collecting dividends gold investors pay for safe storage. Ugh.
David Vomund is an Incline Village-based fee-only money manager. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.