Here are the headlines that I saw when I googled “stock market” today:
“Is a global recession led by a US Stock Market crash in the offing?”
“Dow slides as US stock market suffers worst week in two years”
“Chart analysts see bigger market pullback if interest rates continue to shoot higher”
These headlines are going to affect everyone differently. Let me share with you how it affects me. Normally, I would never read it. But today,
I laugh at it.
It’s useless information.
Let me give you a little background on me.
I worked for Fidelity Investments as a stock broker while I was in college before I joined the military. I’m an avid finance nerd and real estate investor.
I’ve studied the markets long enough to know that index funds are the smartest way to invest your money. Trying to beat the market is pointless.
I also know that a lot of what you see in the financial media space is useless information. They try to predict where the market is going. When they get it wrong, they try to explain logically why they got it wrong, which ends up being the perfect definition of hindsight bias.
Hindsight bias, also known as the knew-it-all-along effect or creeping determinism, is the inclination, after an event has occurred, to see the event as having been predictable, despite there having been little or no objective basis for predicting it.
Financial magazines, newsletters, cable programs, videos, it’s all meant to capitalize on either fear or greed. A few weeks ago, it was greed. The markets were kicking ass.