Don’t Believe the Hype

Oct 27th, 2010

That was the title of a popular song in the 80’s by rap group Public Enemy.  It’s also good advice when tuning into the financial news media, whether it be the national evening news, the 24 hour news networks or print publications. 

The S&P 500 is up 72% as of October 5th from its March 9, 2009 low, but we haven’t heard much yelling on the news about it.  We do remember hearing a lot about how terrible things were when the market was declining.  By the end of February 2009, just before the market bottomed, the S&P 500 was down 45% for the prior 12 months.

Following are some news items that appeared during the downturn: (keep in mind as you read these that the market hit a low March 9, 2009 and is up 72% since then).

December 2, 2008 – MSNBC “Damaged investors could slow a recovery…getting U.S. stocks moving higher again – let alone back to their 2007 levels – is going to be a long haul.”

February 2, 2009 – Market Watch “When the next bull market is coming…I have pushed my expectations for the next bull market out to next year.  Based on simple chart reading it was not a particularly difficult conclusion to reach.”

March 8, 2009 – USA Today “Stock market recovery likely will be years in the making.”

Obviously the presence of such headlines does not mean an impending roaring stock market but they also should not be the basis for abandoning it.  Don’t believe the hype!

Want a couple more?

Jim Cramer on CNBC, March 11, 2008 responds to a viewer who asks “should I get out of Bear Stearns?” by saying “No, No, No”. It aired six days before Bear Stearns collapsed.

The Wall Street Journal ran an article May 29th,, 2010, “Dow’s worst May since ’40”.  What it failed to state was that the return in June of 1940 was 7.7% and the annualized 5 year performance from the beginning for 1941 through 1945 was 12%.  It’s also worth noting that from May 29th to October 5th the Dow is up 7.97%.  Don’t believe the hype!

All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.

Eli Lilly newsletter

Helpful financial information and tips delivered straight to your inbox.

  • This field is for validation purposes and should be left unchanged.