The talking heads and supposed experts have done a good job of scaring investors away from the markets. Their job isn’t to help investors reach their financial goals, rather they are looking to shock investors and make them stay tuned to the channel to learn more (and of course watch their advertisements).
“A connoisseur of woe, needs fresh worries from time to time, or he will become complacent”
Peter Mayle, A Year in Provence
A recent post at dragonflycap.com, has done a pretty good job at classifying these fear mongering talking heads. Greg Harmon, breaks them into three categories:
The Postponement: Their rhetoric sounds like this, “The big market decline we’ve been talking about is going to happen, just not as soon as I said”. This camp believes something big is coming and that it’s always right around the corner. Remember Y2K, the election, the fiscal cliff, and even the recent Fed announcement?
The Rationalization: After a pundit makes a prediction and it turns out to be wrong, his strategy may be to rationalize why some unforeseeable event prevented his prediction from coming true. It’s easy to explain everything away after it’s already happened.
The Decay: These “experts” look for all the small disappoints and set backs and attribute it to an overall decay of the markets, the economy, the country, etc. This camp will look into the lowering of the GDP and turn it into something much, much larger.
These mindsets can be debilitating to an investor if they only look for the negative stories. It’s important to remember these are opinions of people paid to keep you watching the TV and reading their articles.