As both an observer of, and participant in the financial markets for 30-years, one trend has remained annoyingly consistent!
Focusing on stocks for the purposes of this article, I speak of course about the propensity for business news to incessantly downplay the significance of a bad market and to unabashedly cheerlead a good one.
Maybe I’m a curmudgeon and this is only a pet peeve of mine. And, truth be told, the longterm trend of the market has been up even when major corrections like the one during the 2008 financial crisis are taken into account.
But that said if I can’t air my opinions to you, my LinkedIn friends, where else can I?
First a little background concerning my past experience that I believe gives me some degree of credibility.
Before opening Hallmark Abstract Service I was a municipal bond analyst for a major Wall Street wire house, a municipal bond trader and strategist and a proprietary equity trader for a smaller firm.
One of the things that these positions had in common was the fact that current business and global news was always available because breaking news can and does move markets!
And then in the late 1980’s CNBC came on the scene and financial market cheerleading truly morphed into an art form.
But I digress! What brings me to write about the topic of business news channel bias today is the fact that heading into Wednesday of this week the stock market had some of its worst and most volatile days, certainly since the financial crisis.
The VIX (fear index) went from 13 on August 17th up to an intraday peak over 50 on August 24th, and has since fallen to close at 26.10 yesterday. A marked improvement but still at an elevated level.
The S&P 500 (using ticker SPY as a proxy) went from trading in a channel around the 210 range (ending on August 18th) to a low of 187.27 on August 25th.
And while there is no doubt that August 26th and 27th were huge days in the market (largest 2-day gain ever as trumpeted by the business news), the S&P was still 5% below the August 18th value.
At the same time the majority of the analysts appearing on TV, those who would never have called for the correction, are now telling us that a bottom has been put in and that all is well, after an almost 1,000 point bounce in the Dow.
Of course they will hedge their statements by saying that we may retest the lows and then head back up.
Apparently any fears of the Fed raising or not raising rates, cratering crude oil that typically signals weak economic growth along with the faltering China economy are all now yesterdays news and it’s clear sailing ahead.
The bottom-line is that perhaps a bottom has been put in, perhaps the concerns mentioned above that were front and center three days ago are no longer an issue and the above forecast print in GDP yesterday portends better days ahead.
And while perhaps my delivery up to the articulation of my ultimate point was longwinded and circuitous, it is this…
Find a trusted financial advisor with a good long-term track record who has proven by performance to understand the cycles and trends of all of the markets (not only stocks), and stick with them!
And as for the business news? Take much of it with a grain of salt as in my opinion a great deal of it should come with the disclaimer ‘for entertainment purposes only’!
Of course there are some good and honest voices out there who call it as they see it. Stuart Varney, Neil Cavuto, Dagen McDowell, Charles Payne, Jonathan Hoenig, Keith McCullough and even Charlie Gasparino (although his delivery often leaves something to be desired) come to mind and there are certainly others.
Ferret them out and when they are not speaking, turn the volume down.
Article by Michael Haltman, President of Hallmark Abstract Service in New York.
HAS is a provider of title insurance in New York State for residential and commercial real estate transactions.
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