I pulled out my smartphone the other day to view some of the morning’s headlines while waiting for my chicken salad powerhouse wrap (detail added so that you knew I wasn’t driving while reading). Here’s the first line that showed up:
“Dow 20,000 is coming this year…”
My first thought was how funny this headline is. (By the way, for the wise investor who doesn’t track the Dow—the level is around 18,300 as of this writing). Can you imagine the news predicting such a higher market this year just weeks ago when the market sold off by almost 1,000 points (before coming back a few days later)?
This got me thinking about the equity market’s recent “all time high” that is continually making headlines (again). As investors, we have to be careful with what information we’re taking in, and how our perceptions can influence the expectations we have with our own portfolios. A little more than three years ago the same thing was being reported. As the market recouped all of its losses from the ’08-’09 downturn (on a point basis) and began to touch new levels that year, all we heard about was the market’s new high—each time it happened—until a more enticing headline came along.
It’s kind of like having the Baltimore Sun report front page news about how the leaves on trees surprisingly emerge with such brilliance—every single spring. I can see the paper now: “Leaves Are Back, And Greener Than They’ve Ever Been—But For How Long?!” …followed later in the year by the equally astonishing headline “Trees Losing Their Leaves; Experts Say There Is No End In Sight”. > SEE MORE
Pete Dixon, CFP®
Partner and Advisor