Playing Us Like a Fiddle
I love watching how the mainstream media and social media talk about the stock market. When the markets are going through a tough spell, people (hysterically) talk about it. The world is ending! The world is ending! You're all screwed!!! Yet, when the market is doing well, crickets.
I recently did a little informal survey on my Instagram account. Here was the question: "Without looking, how do you think the U.S. stock market has performed over the last 12 months?"
70% of respondents said the market was down. 20% said the market was up. 10% said it's about the same. On average, respondents said the market is down by approximately 9% over the past 12 months. How did they do?
At yesterday's market close, the U.S. stock market was up 32% over the past 12 months (up nearly 34% after accounting for dividends). Strange, isn't it? The overall sentiment is that the stock market is burning, while in reality, it's hitting new all-time highs. The stock market has nearly doubled over the past five years, yet we think the world has already collapsed.
They are playing us like a fiddle! From a behavioral science perspective, we see what we want to see. If we have a negative tint to our lens, we'll find the negative. If we have a positive tint to our lens, we'll find the positive. Today, our culture thrives on a negative lens, and the media all around us is more than happy to help us indulge.
One young man who answered my question guessed that the market is up 30%. He practically nailed it! I voiced my surprise that he knew this and shared why I was conducting this little study: "Oh, I don't watch the news or follow social media."
In other words, nobody played him like a fiddle. He was basing his answer on whatever information (you know, facts) he had available. He was able to cut out the noise, remove the biased lenses, and try to answer my question based on practical thought. Somehow, that's a crazy concept in modern-day America. It's a wild world when we can be more in tune with reality by absorbing less content.
One money-related takeaway. Open your investment account. See for yourself. If you're investing well (i.e., broad, low-cost stock market index funds), you should see your balances at an all-time high. Never before in your life have the balances been at this level. Celebrate that. Know it's true. Also know that rough times will, in fact, come. That's okay, though, as it's all part of the journey.
Lastly, and most importantly, try to muffle the noise, live a meaningful life, and don't let the day-to-day craziness of the media or the stock market mess with you. Life's too short to obsess over the things we can't control.
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