The other night I was making dinner: steak, corn, and hash browns. I went to tell Jesse that dinner would be ready in about half an hour, and he casually informed me he wasn’t hungry. When I asked why, he said he had just eaten a bowl of Cinnamon Toast Crunch… with a side of Pop-Tarts. I need to get a lock for the pantry.
Not exactly a family update, but a life update nonetheless. I recently re-signed my lease, which means I’ll be staying put in my penthouse office overlooking Main Street for another eight years. It really is one of the coolest workspaces you can imagine, and I’m reminded every day how fortunate I am to look out over downtown Sarasota and do work I genuinely enjoy.
My mom is in town this week, and Senay is home from the University of Florida, so the two of them decided to head over to a Pittsburgh Pirates spring training game since, as you know, we’re a Pittsburgh family at heart. They had a great time soaking up the sunshine and ballpark atmosphere, and to top it off, Alex came home with a foul ball, which instantly made it a legendary afternoon in his book. You can see the proud moment in the picture below.
For those who know me, it’s clear that I’m a passionate person. I care deeply about helping people live their best lives in retirement, and that begins with solid financial planning. One thing that truly frustrates me is anything that gets in the way of my clients achieving that goal.
Quite often, my frustration is directed at the financial media. I've talked a bit about this subject in the past, but I got hit with a doozy this week.
"Wall Street could seize your retirement savings in the next financial crash — and it’s perfectly legal."
And this was from a popular and respected news outlet! I would imagine this article isn't fun to read while drinking your coffee in the morning.
To be clear, I don’t believe the financial media is evil or intentionally working against you. But there is an uncomfortable reality worth understanding. Their primary purpose is to attract viewers and sell advertising.
Headlines like this are designed to provoke fear and keep you clicking. They are not designed to help you make sound financial decisions. A big part of my job is helping people tune out the 95% of financial noise that adds stress without improving results.
Here are five common myths the financial media encourages and why you should think differently.
Myth #1: Your investments will suffer if you ignore the markets.
Financial television wants you to believe that watching markets minute by minute is important. Otherwise, why would you keep tuning in?
Warren Buffett has said it well. Long-term success comes from owning good companies for long periods. Investors who constantly react to short-term market moves tend to hurt their results, not improve them.
Myth #2: You must listen to "super-smart Wall Street experts" to succeed.
In reality, even the smartest investors cannot consistently predict market movements.
I recently revisited a 2017 article that featured a list of disturbing market predictions. Since that time, markets have risen dramatically (over 100%). Investors who acted on those fears likely missed significant gains.
Occasionally, someone makes a correct prediction. That success then gets promoted for years. But being right once and wrong many times is still a poor strategy. Go ahead and search for "Howard Dent." That guy is a piece of work.
Myth #3: Experts know why markets go up or down.
You’ll often hear confident explanations when markets move. Economic data. Global events. Interest rates.
The truth is far less tidy. Much of the time, no one truly knows why markets move, even in hindsight. Human fear and greed play enormous roles, and human behavior is difficult to forecast.
During COVID, markets rose sharply despite widespread uncertainty. Markets do not always move in ways that feel logical.
When clients ask me what markets will do this year, my honest answer is simple: "I don’t know, and it doesn’t matter."
Myth #4: Constant buying and selling is necessary to maximize returns.
Active trading makes for exciting television. It does not make for better investment outcomes.
Myth #5: Advisors rely on financial media to guide decisions.
I do not.
Professional advisors rely on planning and long-term strategy, not television commentary.
This might sound blasphemous, but delete the stock app from your phone. It is not helping you in any way.
Be Blessed,
Dave