In the days before financial news media broadcasted market information around-the-clock with scrolling pre-market quotes and endless “Breaking News” segments;
In the days before online brokerages marked your net worth up or down with every tick in the S&P 500 while simultaneously pitching products designed to squelch those worries;
In the days before 100s of virtual and real analysts dissected, projected, and connected every data point from presidential poll data to Chinese PMI’s;
In the days before every word, facial tic, hand gesture, and suit color worn by Janet Yellen was scrutinized, humanized, and hypothesized;
In these oft-forgotten days, there was one man and one show that investors turned on and tuned in for their financial news: “Wall $treet Week with Louis Rukeyser”.
This original financial news show aired on PBS from 1970-2002, and hit peak popularity in the mid-80s. Some would argue its appeal led to the launch of CNBC. Rukeyser is best known for his pun-filled humor and attempts to shift investor’s focus from the short-term market gyrations to the long-term. Along with countless awards and recognitions for outstanding journalism, People magazine once named him the “sex symbol of economics”.
Rukeyser sadly departed in 2006 at the age of 73, but many of his broadcasting memories are still alive on YouTube. Here’s a clip from shortly after the October 1987 crash (fast forward to 1:40 mark for Rukeyser’s monologue):
And the money quote:
“Ok, let’s start with what’s really important tonight… It’s just your money, not your life. Everybody who really loved you a week ago still loves you tonight. And that’s a heckuva lot more important than the numbers on a brokerage statement. The robins will sing, the crocuses will bloom, babies will gurgle, and puppies will curl up in your lap and drift happily to sleep- even when the stock market goes temporarily insane! And now that that’s all fully in perspective, let me say Ouch! … and Eeek! … and Medic! Tonight we’re going to try to make sense of mass hysteria, to look behind the crash of ‘87, and most perilously but most important of all, to look ahead.”
If you listened to Rukeyser in 1987 and held on to your stocks, you’ve witnessed a 10-fold increase in the Dow Jones Industrial Average in the past 3 decades. This return outperforms every major asset group. Note, his calmness during the crash contrasts the current state of financial news. While Rukeyser helped investors focus on the long-term, modern financial news wants investors to focus on the short-term.
In the short-term, every piece of news is “Breaking”, significant, meaningful, and market moving. In the long-term, none of these events individually matter. They’re merely noise.
Financial news networks (CNBC, CNNfn, Fox Business, Bloomberg TV) focus on the short-term to create the narrative that you should always be concerned about your money. This narrative is essential for their business model: Concern drives viewership, and viewership sells advertising time- the veritable raison d’être of financial news.
Without concern that a grand piano tethered to a loose string is looming over the market, people would stop watching and the ad dollars would migrate to other channels. Exciting program titles such as “Squawk Box”, “Mad Money”, “Fast Money”, and “Power Lunch”, emphasize your need to be concerned.
Take a look at CNBC’s viewership numbers over the past 17 years:
Viewership spiked at times when investors were concerned: the tech bubble and the financial crisis. Fully cognizant of these numbers, CNBC creates the illusory narrative that a market moving event is lurking around the corner. An event that needs to be closely watched because this event could wreck your portfolio. If CNBC anchors are talking about an upcoming event, the risk is likely priced into the stock market.
Known risks don’t cause unexpected selloffs. Known risks mean that investors are making contingency plans through hedging or selling stocks. Known risks mean that the market is braced for the event and its impact should be muted. Known risks mean that the market is more likely to be higher after the event passes.
For instance, have a look at the 43% rally in the SPY over the past 2 years:
Every little dip along the uptrend represents events that might have derailed the markets, but eventually turned out to be inconsequential. Remember these negative narratives from the past 2 years:
The Fiscal Cliff
Debt Ceiling Negotiations
Russia Invades Ukraine
China – Japan Tensions
While each caused short-term pullbacks, none of these events changed the current drivers of stocks: low interest rates, buybacks, strong earnings growth, and a gradually improving economy. These are long-term drivers that are resistant to change once set in motion. If Louis Rukeyser were still around today, he would be humorously highlighting these positive long-term themes, not the negative short-term narratives.
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