The Financial Media is Not Your Friend

On July 20, you may have noticed, the equity market began its move up and out of a range it had been tracking since the mid-June panic lows. If you were not aware – good for you as my messages are taking hold.

The ultimate threat to the financial media business is that you will begin to breathe easier and feel just a wee-bit better about what may be going on in the markets, the world, and life overall.

However, financial journalism absolutely did notice— and as always was waiting patiently to unleash its “crisis of the day” response kit. Why – you may ask - would they do this? Because even the briefest positive trend signifies a tremendous threat to the clickbait catastrophism that continuously rings their cash register during a bear market. The old saying of – “if it bleads, it leads”- still holds true.

The ultimate threat to the financial media business is that you will begin to breathe easier and feel just a wee-bit better about what may be going on in the markets, the world, and life overall.

But wait - media cannot and will not allow this because they know that if your financial blood pressure declines, you will naturally stop clicking on every apocalyptic headline they can conjure up. And if it continues, it will depress their advertising revenue.

As a response, throughout the day on July 20, we were treated to the following bombardments:

“The current rally will likely fail, expect S&P 500 to drop below June lows—Fairlead Strategies.” This is an actual headline from Seeking Alpha. What's that you say? You've never heard of “Fairlead Strategies”? Why, neither has anyone else, but that's irrelevant. It is an explicitly bearish headline - when media most desperately needed one. As a side note, the firm being quoted appears to be one person, doing short-term technical analysis. For those of you who don’t know what technical analysis is: in terms of predictive credibility, technical analysis exists to make voodoo look respectable.

“Why the stock market still hasn't priced in a full recession.” This beauty from Yahoo Finance includes the sentence “Sentiment is so poor that equity allocations are the lowest since the 2008 financial crisis and cash levels are at the highest since 9/11.” The reporter most likely doesn’t realize it, but both these data are screaming buy signals – historically speaking. However, the headline writer most certainly is, which is why they spun the headline negatively. Remembering it's the headline—and not the substance—that attracts the click.

“Stock market bottom or bounce? What skeptics want to see as S&P 500 extends gain.” This from the site MarketWatch; the subhead is “Premature to assume bear market is definitely over,” So, who provided this peach of a topic—you guessed it—another no-name technical analyst.

And to top it off: “Legendary investor Jeremy Grantham says stocks could plunge another 25% as the ‘superbubble' continues to pop.” This one emerged on Fortune.com. They must have figured that with an increasing amount of good news – it’s time to bring out the permabear du jour and define him “legendary.” As a historical reminder - Fortune is the magazine that cherished Elizabeth Holmes in a cover story, after having named Enron America's most innovative company six years running. (Lots of credibility there, yes?)

You can count on the fact that just when the sun is shining again, the economy is regaining its normal business cycle, and the market is ascending its longer-term trend, that's when financial media will unleash its last, desperate emotion-pulling weapon: the double dip!

Now, you may think I'm kidding about this, or that it's just my overly sarcastic and long held perception of the financial media boiling over. You're going to read this…It's just a matter of time. Regarding the economy: the double dip recession. And in the market: the W-shaped recovery (a/k/a “the inevitable test of the old lows”).

If I were to guess what media will cite as the (one and only) double dip recession in history: the blip in 1980 followed by the Volcker-engineered one in 1981-82. Most likely, this untreated sewage is being warmed up even as we speak.

And regarding equities (fractional ownership of businesses), media will utilize every trick in its bag to deny the one undeniable mega-truth: the best predictor of the trajectory of a market recovery is the trajectory of the previous decline.

Once again: financial media exist for one reason only—to sell advertising. Their revenues are tied to clicks. And clicks are a function of trapping readers in a never-ending cycle of fear and regret. In one sentence: financial media exist to help investors fail.

That's what the media were doing on July 20. That's what they're doing right this minute. And that's what they'll always do.

And the only antidote is: Focusing continuously on your long-term plan.

Source: Nick Murray NMI Interactive August 2022