Federally Funded Ferris Wheels

Federally Funded Ferris Wheels

November 14, 2023

Imagine this: what quizzical, hairbrained comments might escape your mouth if you had to talk every minute of every hour of every day of the year?

Such is the plight of the financial news. No matter how hard they try, there is only so much to talk about. Naturally, when some new story breaks they latch onto it, blow up the story like a balloon about to burst, and hope it can keep viewers’ interest until the next news opportunity arrives. If we had to talk constantly, wouldn’t we cast about desperately for anything that might fill the space in the same way? It’s a hard life.

That said, we don’t have to listen (or worse, act). The ever-flowing updates are all too often a bunch of hot air rather than productive information. The problem is that too many people conflate this ever-flowing waterfall machine with meaningful information. They take action on the Squawk Box or a financial news YouTube channel. They see red numbers flash across the bottom of Bloomberg or a chart of something going down next to a pundit’s head and start to worry…when they may even know what the numbers or charts mean. Perhaps most tellingly, if you look up Squawk Box on Google, you will see that there are 22 “seasons” of the “show”. That is the language of entertainment, not the language of decision-making.

Listening to the latest financial news stories and “experts” on TV or commercials about gold coins and acting is like me running my business based on what I saw watching “The Office”.

Yet people buy and sell on the whims of that incessant entertainment. And by attempting to time the market or a particular investment, they tend to miss out.

Here is a clue why. In 2023 there have been 113 up days and 102 down days for the S&P 500 as of November 8th–almost the same. Yet the S&P 500 is up about 14% for the year as of November 8th. It is a powerful reminder of the importance of sticking with a long-term strategy–attempting to time markets is a remarkably difficult task. Much of the gains have arrived in just a handful of days peppered across the year. But if you held back all in cash for even a few of those days, your outcome looks completely different.

Nicholas Colas, head of a data analyst business, said it well:
“The adage that the stock market takes the stairs up but the escalator down is absolutely true. The stairs take more time and can occasionally seem exhausting. But they are the only way up.”

The moral of the story: treat financial news like drinking alcohol. An occasional drink of the finance channel and perpetually scrolling tickers is fine and entertaining. But consume too much and you will find your decision-making significantly impaired. You don’t want to drive your financial car under the influence. View responsibly.

Let’s end this on a lighthearted note. As I said before, consider financial news 99% entertainment. And when someone has to talk constantly, hilarious things blurt out of minds and mouths. Here are some actual examples that made me chuckle:

Associated Press: “World Bank Says Poor Need More Money”.
New York Post: “Statistics Show Teen Pregnancy Drops Off Significantly After Age 25.”
Or when MSNBC anchor Brian Williams infamously argued that Michael Bloomberg could have taken his $500 million of political ad spending and instead paid every American a million dollars each.

I like that math.

The Onion (who admittedly does take it too far at times and can be quite offensive) takes it a step further, showcasing how satire can illustrate a point better than my ramblings ever could. Humor is the WD-40 of lessons. A few headlines that strike the chord:

"Dollar Bill On Floor Sends Wall Street Into Frenzy"

“Report: U.S. Economy Loses $5 Billion Every Year To Americans Rising For National Anthem”

“Joe Biden Officially Wishes Student Loans Away By Blowing On Dandelion”

“Cost Of Living Now Outweighs Benefits”

“Report: Government Shutdown Could Imperil Hundreds Of Americans Currently At Top Of Federally Funded Ferris Wheels”

I submit to you that most financial headlines and stories contribute to your financial success about as much as these silly headlines. The place of focus should remain squarely on what we can control: things like our savings rates, sticking to our original investment strategy, having the right kinds and amounts of insurance, and being tax-smart with where we take income and save money.

That said, if you are ever unclear about whether something you saw or read or heard is something worth acting on, please reach out to us and ask. Your concerns are valid and real, no matter where they came from, and we can help you differentiate between noise and real opportunity (and not feel judged in the process!).


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