There is a great scene in the movie The Paper with Michael Keaton in which the characters are sitting in a conference room discussing the next day’s front page. There has been a big sensational story, and they ponder over how to best deliver a headline. When they finish, one of the characters says, “With a slammer (exclamation point).” At which point, one of the characters rolls her eyes and says something about heaven forbid if they ever ran a headline with an exclamation point.
I’ve never worked in a newsroom and I have no idea how accurate the movie is, but I do know that newspapers and magazines work very hard to grab our attention with their headlines, and if they can use a powerful buzz word, then so much the better.
Yeah! It’s a Bear Market…Not.
On Monday, the stock market closed just over 19.5% down from the last high point. This is significant, because the definition of a Bear Market is when the stock market is down 20% from its previous high. Yesterday, the markets started the day lower dipping enough to slide below the magic 20% number. The results were almost instant. On every major business web site and even on numerous regular news sites, the headlines flew up in large bold characters. Bear Market were the key words in whatever clever phrasing they came up with. The press was happy. Bear Market makes for a great buzzword especially as confidence in the overall economy is slipping.
There was just one problem. Shortly after dipping into bear market territory, stocks started moving back up. By noon, they were in positive territory quashing the bear market generated ever so briefly earlier. I could almost hear the grumbling in the newsrooms.
In fact, GM reported lower than expected losses and the markets finished the day up. No big bold Bear Market headlines for today’s newspapers. They would have to go with something less powerful (although, I’m sure, just as gloomy).
Media Outlets and the Markets
It is useful to keep this story in mind. Various publications whether they be newspapers, web sites, magazines, or T.V. shows figure they have just seconds to grab your attention. To do that they use flashy buzz filled headlines that they hope will inspire you to give them a chance. There is nothing wrong with this, but it does mean that thoughtful, well-researched money stories must be sought out by intelligent investors and financial advisors.
Top Ten Best Whatever is hardly a good way to get solid analysis. Look beyond the flashy headlines and read the details. Educate yourself by reading the Finance Gourmet and other resources that provide in-depth looks. Then, make sure you use your brain and think for yourself. After all, does it really matter if the markets are down 19.5 percent or 20.1 percent? Does that affect your portfolio or finances in any way? The answer is it shouldn’t. Your long term financial plan should not react to these short term events, and your short term financial plan should not involve the stock market. So, either way, these headlines are nothing more than entertainment for the smart investor.