Investment gurus on TV and the financial press often traffic in dis-information. Some are trying to manipulate their own stock portfolios. Others are trying to promote their latest book, or drive traffic to their website. Some just like to be in the spotlight. And many are well-meaning in their advice, but turn out to be dead wrong. They make predictions about the future by saying that the market is going higher, or gold is going lower, or bonds are going to crash. In each case, there is an assumption that gurus have a special ability to see the future. Unfortunately, that’s not possible.
Because Wall Street is often in bed with the financial media, much of this dis-information is presented for the purpose of encouraging unsuspecting investors to gamble with their life savings. Buzzwords like “flash crash, insider trading, dark pools, high frequency trading” and so on, tell us that we’re dealing with a casino mentality, not a real market where stocks are bought and sold on the basis of fundamental information.
Some market theorists say that a new, long-term bull market started in March of 2009 when the DOW bottomed in the 6,400’s. But the market has been so volatile since then that most investors haven’t fully participated in the gains. The market has more than doubled in price over the last four years, yet very few retail investors (non-professionals) have capitalized on it. But now that the market has fully recovered from the crash of 2008, and is making new highs, the gurus are out in force promoting the dawn of a new bull market.
Investors who followed the conventional wisdom of “buying and holding” a well-diversified portfolio of blue chip stocks have gone nowhere since 2000. But the media, in concert with Wall Street, has been hawking the idea that the global capitalistic revolution is alive and well, so we had better get on board before it’s too late. The ironic part is that the higher the market climbs, the more these gurus are trotted out by the media to make their predictions and sell their wares.
We’ve had 13 years of extreme volatility in the stock market, so maybe it’s time for a few years of slow and steady gains. But instead of taking your advice from the talking heads on T.V., do your own research. If you have been avoiding the stock market because of uncertainty about the future, maybe it’s time to re-evaluate your assumptions. If you have less than 50% of your money in the stock market, this might be a good time to think about adding more. And if you have a large exposure to the bond market, it might be a good time to start cutting back.
Nobody knows for sure what the future will bring, but one thing is certain: the fortune-telling gurus on T.V. will always pretend that they do.