Investing is a long-term game – but the media is focused on short-term noise that sells headlines.
The news industry idiom ‘if it bleeds, it leads’ should tell us everything about how they choose what to publish…
…(whatever causes the most panic).
The constant barrage of speculation, means it’s easy for investors to get caught up in the moment. To think the crisis of the day will continue.
I’ve taken 35 doom-predicting cover pages from TIME, The Economist, Barron’s and Bloomberg to see how markets performed over the next 5-7 years.
It paints a stark picture of how poor an indication the media can be for investors.
Many of the worst headlines, preceded incredible periods of market growth.
1. TIME, Economy: The Big Headache – September 1974
“The stock market has scarcely been so shaky since 1929. Just about everybody who buys, sells, borrows or invests has that overall feeling of unease. And there is no fast, fast relief in sight.”
Annualised return of a globally diversified stock portfolio – 12.7% per year (before dividends).
2. Bloomberg Businessweek, The Death of Equities – August 1979
“For better or for worse, then, the U.S. economy probably has to regard the death of equities as near-permanent condition—reversible some day, but not soon.”
Annualised return of a globally diversified stock portfolio – 6.9% per year (before dividends).
3. TIME, America’s Banks: Awash in Troubles – December 1984
“Bankers now face their most strenuous survival test since the Great Depression… American consumers are increasingly concerned about the safety of their money in the bank.”
Annualised return of a globally diversified stock portfolio – 24.8% per year (before dividends).
4. TIME, Trade Wars – October 1985
“On one side is the White House, which clings to the ideal of free trade. On the other is an apparent majority in Congress, which seems convinced that the U.S. is being played for a sucker by its so- called friends abroad.”
Annualised return of a globally diversified stock portfolio – 13.5% per year (before dividends).
5. TIME, Trade Wars: The US Gets Tough with Japan – April 1987
“Sizable shock waves rattled around the world in the wake of the U.S. action, which was prompted by alleged Japanese cheating in the sale of the useful semiconductors and by Tokyo’s alleged intransigent protection of its domestic microchip market.”
Annualised return of a globally diversified stock portfolio – 4.3% per year (before dividends).
6. TIME, The Crash – November 1987
“The Lindenhurst, N.Y., couple watched helplessly last week as their $300,000 portfolio of stocks sank in value by 20%. Said Bernice: “We have been investing in the market for 22 years. Now this happens, and it threatens what you have worked for over a lifetime.”
Annualised return of a globally diversified stock portfolio – 4.8% per year (before dividends).
7. TIME, Is the boom over? – September 1998
“The buy-on-dips strategy, the only one you needed to know for this decade, finally failed last week. Investors, including many pros like me, had grown used to taking advantage of every substantial decline in their favorite stocks, but now find themselves deluged with more shares than they can carry in a truck. Why didn’t the dip turn back up this time?”
Annualised return of a globally diversified stock portfolio – 3.7% per year (before dividends).
8. TIME, Will you ever be able to retire? – July 2002
“Stocks and other investments are expected to grow more slowly than usual for years to come. Health-care and college costs are rising fast. Many middle-aged Americans who had children relatively late in life are being hit with tuition bills at the same time…”
Annualised return of a globally diversified stock portfolio – 16.6% per year.
9. The Economist, The end of cheap money – April 2004
“America’s super-loose monetary policy is fuelling potential bubbles abroad as well as at home. Around the globe, speculators are borrowing cheap dollars and investing the proceeds in higher-yielding bonds in Brazil or South Africa, or in property in Shanghai… It is time for the Fed to pull back on the throttle.”
Annualised return of a globally diversified stock portfolio – 10.3% per year.
10. The Economist, Back to the 1970s? Inflation returns, worldwide – June 2004
“By October 1979, Paul Volcker—then chairman of America’s Federal Reserve—had had enough. In his so-called “Saturday night special” he announced a severe tightening of monetary policy designed to squeeze out inflation. Since then, inflation has fallen everywhere… Many worry that this success might now be in jeopardy.”
Annualised return of a globally diversified stock portfolio – 6.3% per year.
11. The Economist, World on the edge – October 2008
“Look beyond the stockmarkets, especially at the seized-up money markets, and there is little to see except bank failures, emergency rescues and high anxiety in the credit markets. These forces are drawing the financial system closer to disaster and the rich world to the edge of a nasty recession.”
Annualised return of a globally diversified stock portfolio – 13.5% per year.
12. The Economist, Into the storm – October 2008
Annualised return of emerging markets – 15.4% per year.
13. TIME, Holding on for dear life – March 2009
“Trouble stretches beyond the province of liar loans, condo-flipping and the collateralized debt obligations that no one fully understands… Consumers have stopped spending, factories have stopped operating, employers have stopped hiring–and home values continue to fall. For millions of people, the margin between getting by and getting buried is becoming as thin and as bloody as a razor blade.”
Annualised return of a globally diversified stock portfolio – 17.8% per year.
14. The Economist, Bubble Warning: Why assets are overvalued – January 2010
“A year ago investors were panicking and there was talk of another Depression. Now the MSCI world index of global share prices is more than 70% higher than its low in March 2009… The problem for them is not just that valuations look high by historic standards. It is also that the current combination of high asset prices, low interest rates and massive fiscal deficits is unsustainable.”
Annualised return of a globally diversified stock portfolio – 9.8% per year.
15. Bloomberg Businessweek, Ireland Underwater – November 2010
Annualised return of a globally diversified stock portfolio – 8.0% per year.
16. Bloomberg Businessweek, Crisis in Japan – March 2011
Annualised return of a globally diversified stock portfolio – 5.2% per year.
17. Bloomberg Businessweek, USA Inc. – March 2011
Annualised return of a globally diversified stock portfolio – 5.2% per year.
18. The Economist, The new tech bubble – May 2011
“Some time after the dotcom boom turned into a spectacular bust in 2000, bumper stickers began appearing in Silicon Valley imploring: “Please God, just one more bubble.” That wish has now been granted.”
Annualised return of a globally diversified stock portfolio – 5.2% per year.
19. The Economist, The world economy: Stick patch or meltdown? – June 2011
“Stock prices have been sliding for weeks in response to gloomy economic news. Factory output has slowed across the globe. Consumers have become more cautious… Globally, growth is at its weakest since the recovery began almost two years ago. Is today’s softness just a sticky patch, or is the global recovery beginning to melt away?”
Annualised return of a globally diversified stock portfolio – 5.4% per year.
20. The Economist, Time for a double dip? – August 2011
“Stockmarkets around the world have tumbled. On August 2nd, the day the debt deal was signed, the S&P 500 index saw its biggest one-day fall in over a year, and yields on ten-year Treasury bonds dropped to 2.6%, their lowest level in nine months, as investors sought safety.”
Annualised return of a globally diversified stock portfolio – 8.3% per year.
21. The Economist, Greece – November 2011
Annualised return of a globally diversified stock portfolio – 8.9% per year.
22. The Economist, S-Pain – August 2012
“Spain’s nightmare is a symptom of what is wrong with the entire euro zone. As the months drag on, the crisis is deepening. Europe’s leaders have asked the world to trust that they will do what it takes to save the euro.”
Annualised return of a globally diversified stock portfolio – 10.5% per year.
23. Bloomberg Businessweek, For Euro Crisis Relief: Bang Head Here – April 2013
Annualised return of a globally diversified stock portfolio – 8.9% per year.
24. The Economist, The British Economy: How is it really doing? – August 2013
Annualised return of a globally diversified stock portfolio – 9.7% per year.
25. The Economist, Has Brazil blown it? – September 2013
“Four years ago this newspaper put on its cover a picture of the statue of Christ the Redeemer ascending like a rocket from Rio de Janeiro’s Corcovado mountain, under the rubric “Brazil takes off”.”
Annualised return of a globally diversified stock portfolio – 8.7% per year.
Annualised return of Brazil, Russia, India, China stocks – 4.4% per year.
26. Bloomberg Businessweek, Bears – August 2015
Annualised return of a globally diversified stock portfolio – 10.2% per year.
27. Barron’s, How this bull market will end – September 2017
“Scaling great heights, whether climbing a Himalayan peak or watching the market rise, comes with risks that must be monitored every step of the way. And the higher you go, the greater those risks become.”
Annualised return of a globally diversified stock portfolio – 10.2% per year.
28. The Economist, The bull market in everything: Are asset prices too high? – October 2017
“Still the most dangerous, anti-Graham motto of investing is “this time is different”. It would be daft to assume that asset prices must remain high come what may. Many hazards could derail the economy and financial markets, from a debt crisis in China to an American-led trade war or an outbreak of fighting on the Korean peninsula.”
Annualised return of a globally diversified stock portfolio – 9.6% per year.
29. The Economist, The threat to world trade – March 2018
“As yet it is unclear exactly what Mr Trump will do. But the omens are bad. Unlike his predecessors, Mr Trump is a long-standing sceptic of free trade. He has sneered at the multilateral trading system, which he sees as a bad deal for America.”
Annualised return of a globally diversified stock portfolio – 9.1% per year.
30. Barron’s, The Bull’s Final Countdown – July 2018
“All of us, at some point, must confront our mortality. So, too, must investors prepare for the demise of a bull market that began in the depths of the financial crisis in 2009.”
Annualised return of a globally diversified stock portfolio – 8.2% per year.
31. Barron’s, It’s not too late yet – September 2018
Annualised return of a globally diversified stock portfolio – 6.5% per year.
32. The Economist, The next recession: How bad will it be? – October 2018
“This week stockmarkets tumbled across the globe as investors worried, for the second time this year, about slowing growth and the effects of tighter American monetary policy. Those fears are well-founded.”
Annualised return of a globally diversified stock portfolio – 7.5% per year.
33. Bloomberg Businessweek, The Trump Slump – January 2019
“The Trump Slump is a bigger phenomenon than just a downturn in the stock market. But every red day on Wall Street is another punch to the president’s gut.”
Annualised return of a globally diversified stock portfolio – 10.2% per year.
34. The Economist, Markets in an Age of Anxiety – August 2019
“Taken together markets express something about both the mood of investors and the temper of the times. The most commonly ascribed signal is complacency. Dangers are often ignored until too late. However, the dominant mood in markets today, as it has been for much of the past decade, is not complacency but anxiety. And it is deepening by the day.”
Annualised return of a globally diversified stock portfolio – 12.1% per year.
35. The Economist, Closed – March 2020
“It has become clear that the economy is taking a much worse battering than analysts had expected… Faced with the most brutal recession in living memory, governments are setting out rescue packages on a scale that exceeds even the financial crisis of 2007-09.”
Annualised return of a globally diversified stock portfolio – 15.2% per year.
The chart the news won’t show you…
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