In my own small way, I’m always thinking about how our message to our clients can be timely, relevant, and relatable. I’ve struggled for years, often having “writer’s block” as to what message these commentaries would be about.
In all the years that I’ve written these commentaries, I can say with great honesty, that I can’t recall a time where the famed British comedy group Monty Python ever came to mind as a way to convey an important topic that I was eager to write about, and that I felt was important for my clients to know about.
Well, today is the day . . . all I can think about as I write this is “And now for something completely different”. These days, I can’t help but think of something completely different than the headlines in financial journalism. Their unremitting laboring to throw shade on every bit of good news, is excruciatingly exhaustive for investors, because financial journalism is so good at selling the only product they know: FEAR.
Ever hear the phrase – “The hard, cold truth is . . . “? Well financial journalism seems to ALWAYS tell you “The hard, cold truth”. However, what if the truth wasn’t “hard and cold”, but actually “soft and warm”? The “soft and warm” truth is all around us and yet the “hard and cold” establishment of financial journalism (or any mass media for that matter), refuses to recognize it.
My case in point: The August jobs report, where 235,000 new jobs were added to a COVID economy, and CNBC chose to spin it with fear by running the headline “ONLY 235,000 NEW JOBS CREATED, DISAPPOINTING INVESTORS AGAIN”. Let me ask you a simple question: Were YOU personally disappointed? After what this economy, and what we’ve all been through personally over the last 18 months, the fact that well over 235,000 Americans found a job that pays them a higher wage, which will surely lead to becoming more financially secure must be reported as a good thing right? Well apparently not.
What’s more is that the Federal Reserve dumped on us more good news, that yet again, mysteriously went unreported by the financial media:
- For the 1Q21, U.S. private sector household net worth (including nonprofit organizations) jumped 3.8% to a record $136.0 trillion, and has exploded over the last five years, absolutely clobbering household debt (see chart). Source: Federal Reserve
- The S&P 500 companies (the 500 largest companies in our economy) may earn a record $1.5 trillion in 2021, topping the record $1.3 trillion they earned in 2020, according to Howard Silverblatt of the S&P Dow Jones Indices.
- The Economist recently pointed out that overall global investment may rise to 121% of pre-recession levels by the end of 2022. This is enormously significant, because investment in new technologies and business methods is the driver of productivity growth, and thus higher living standards. Yet somehow, I can’t escape the feeling the eternal purveyors of doom will somehow spin this into a headline that will in no uncertain terms make you fearful.
- Another little golden nugget in the Federal Reserve notes was that household debt totaled $16.9 trillion (to wit, CNN had a field day of fear on that number) growing at the fastest pace going back to 2006. And yet those households (as shown by the attached chart of US household debt service as a percent of Disposable Income) haven’t’ been in this good of shape to pay that debt in over a decade (i.e. they have no trouble paying their bills). Where’s the headline on that CNN?
My point is simple: Be mindful of the sources from where you get your information. Consider their motives, tone, and facts. In many cases, only one side of the coin is presented to you, which may bring detrimental harm to your investment decisions.
“And now for something completely different”: We live in great times, that while challenging, are seeing unprecedented positive changes in our standard of living. The opportunities to achieve your financial goals are greater now, than perhaps at any other time in history.