Tune out the noise.

Over the last 24 months, I have realized how negative and irrational the media is. Especially in finance, but that may also be due to my constant consumption of financial media. If you’re uninformed or generally not a finance-oriented person, this can have a massive impact on your actions and your feelings around markets and investing. There was a point in time over the past few years where bad news was bad news, good news was bad news, and basically any news was just bad for stocks and investors.

First off, let’s start with the fact that the S&P 500 and Dow Jones Industrial Average are both trading at all-time highs. This is awesome, but what was being said on the news all of last year as we climbed to this new high? Not much that was generally positive. “Okay, so I won’t let the media get to me. I’ll follow the predictions the big banks make.” Well, sorry to hear that, unfortunately, even a lot of the big banks were caught off guard in making their highly publicized projections of the market’s 2023 performance. Following this media and the projections banks give can be harmful when we allow it to influence our long-term portfolios. 

I’m not one to make a market call; let’s just say I don’t have the guts to openly state my opinions and live with myself when I am inevitably wrong. I am not trying to dunk on anyone here, rather I am just trying to prove the point that generally financial media and predictions should not influence your portfolio’s allocation, your mindset, or your automatic investments when you have long time horizons.

Don’t get it twisted, financial media is, in my opinion, 100% entertainment. Everyone is giving their two cents, projecting their opinions with a slew of data, market history, and predictions. It is usually tough to find the ones giving positive forecasts. Negative news sells, it creates fear, it gets you to click on the article and then send it to your friends… I mean, you have to let your friends know that someone says a massive financial crisis is on its way, otherwise are you even really friends?

Now that 2023 has come to a close, let’s see where the big guys had projected the S&P 500 to end up. The clip below is from Mike Ivancie’s article where he covers what each big bank projected the S&P 500 to end up at for 2023. 

Welp! The S&P 500 ended 2023 at roughly 4,770! Better luck with your guesses for 2024 big banks! Maybe the analysts making these targets consumed too much negative financial media and let that cloud their judgment. Or maybe, just maybe, no one can predict where a market is going over a time frame as short as 12 months. 

The S&P 500 rallied 24% in 2023. That didn’t stop financial media from spewing negative takes left and right. Let’s take a look at some of my favorite headlines from last year:

This is a great one. After a full year of how inflation was going to wreck the financial markets, we actually switched up completely to say that falling inflation is bad news. The S&P 500 is up over 6% since this article was published.

The S&P 500 is up roughly 16% since this article was published… 3 months ago. Imagine if you had gone to cash?! You’d be kicking yourself right about now. 

Macy’s employs nearly 100,000 people and they have 508 locations. This is a reduction of roughly 2.5% of their workforce. The media loves to play the numbers game. They will put a number that seems drastic in the headline but usually forgo putting any meaning behind the number they present to you. 

Amazon employs over 1,500,000 people. A reduction of 27,000 is less than 2% of their total workforce. 27,000 people sounds like a ton, but relative to what? I actually remember when this happened. Someone brought it to my attention, but I had already known what percentage this represented. They were not nearly as shocked as they had been upon realizing the percentage of their layoff was so tiny.

This is a classic. The media will either choose a percentage or give you a drop in points, whichever seems worse. For reference, this is roughly a 1% decline for the Dow. We have experienced numerous 1% daily declines at this point, I am almost numb to them. But alas, let the fear-mongering begin!!

Alright, I’ve had my fun. In all honesty, I try to stay as positive as I possibly can. Who wouldn’t be rooting for the markets to go up?! I don’t mean to encourage people to ignore all of the financial media, what I mean to do here is raise awareness that the media is usually covering daily changes, not monthly, not annually, and definitely not over the course of decades. Be cautious and aware as to how predictions and negative media affect your feelings towards investing, especially when we have 20, 30, or even 40 years to let our portfolios compound.

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