In this week's episode we address the topic of mixed messaging in financial media. There are many different headlines daily in the media and as investors we can struggle with who is right and who is wrong. In today's conversation, we are going to pick apart how investors should look at financial news and how they might be able to understand it a little bit better and how to take action on their own.
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Ryan Staton is an Investment Advisor of, and securities offered through, Founders Financial Securities, LLCMember FINRA/SIPC and Registered Investment Advisor.
Devin Walsh is an Investment Advisor of, and securities offered through, Founders Financial Securities, LLCMember FINRA/SIPC and Registered Investment Advisor.
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Hello everyone. And welcome to this week's episode of wealth builders presented by StatonWalsh. In this week's episode, we address the topic of mixed messaging in financial media. There are many different headlines that we see on a day to day basis on the news, and as investors, a lot of us struggle with who's right, and who's wrong in today's conversation. We're gonna try to pick apart how investors should look at financial news and how they might be able to understand it a little bit better or more importantly, take the information that they're seeing and reading and putting it into action in their own investment portfolios.Speaker 2:
This is wealth builders presented by StatonWalsh, a show designed to pull back the curtain of the financial industry and bring true transparency to the forefront of conversation. On the show, we cover topics like financial education, current events, and interview business leaders and industry experts with the ultimate goal of helping listeners discover their own path to financial independence.Speaker 3:
Welcome to this week's episode of wealth builders, Ryan , uh , I tell you what man, it's , uh , the stock, market's been a little crazy recently and we are seeing all kinds of headlines. Some are doom and Gloom and some are positive. So today we're gonna be talking all about mixed messaging, who should we be listening to? Who's the right people to get your news from and advice, and kind of what our opinion is of what's currently going on. And we hear all like hot words , inflation. We hear oil prices. And I think today gas is one over $5 gallon for the national average. So what's going on right now, right? There's just so many mixed messaging coming out there and we're trying to stay optimistic. We still believe there's value out there. But just one thing after another keeps hidden and people are seeing these news sources and everything that's saying, you know, there's a recession come and the market's going to crash and you see other ones say here's the opportunities and , um , the optimism. So talk to me a little about what you're seeing, what your thoughts are about all the mixed messaging that investors are seeing right now.Speaker 1:
Yeah. So I think the short answer to your original question is a lot, there's a lot going on. It's hard to distinguish for anyone. And even in our position, you know, as professionals in this world, we see news and market opinions and things day to day , and it can be hard human dynamic. I think the emotional reaction is you read something. If you think something in your head is true, you're look gonna seek out news. That's going to validate that, you know, confirmation bias is something that's referred to confirming that what I believe the , the preconceived notion that I have in my head is actually going to come true . So the point is that it there's a lot of, like you mentioned, there's a lot of news out there and there's varying headlines. It's interesting. You remember you sent me a screenshot a couple weeks ago and it was, it was on the , uh , for those that have apple phones or iPhones out there, it was on the stock app and it was two articles, one right below the other one, basically saying the stock market will tank. And the other saying that there are analysts out there that are predicting a potential shocking rally or potential boom coming for the rest of this year. So very differing opinions. I would say that if anyone tells you, they know exactly they can predict exactly what's gonna happen from now until the end of this year. And beyond that, I would've a hard time trusting that opinion. None of us have a crystal ball. No one knows what exactly is gonna happen in the market. I think ultimately, and sometimes I probably sound like a broker in record saying this, but the reality is that everybody's journey is a little different. Everyone gets in the market at different points in time. So how do you make sense of what's gonna happen? And, and what does that really truly mean for you? I think it's gonna vary depending on things like risk tolerance, time, horizon, things going on in your life today in terms of reliable news sources. There are some, there are some that still have inherent bias, right? Like, look, whoever writes an article as much as they would like to remain objective, everyone has their own opinions. And to some degree we're guilty of it too. Our opinion is that investing is part of a broader ecosystem of planning, so to speak. It's just a piece of the puzzle. It is not everything, but not everyone agrees with that. So making sense of it is the hard part. You read something, you see something on the news, what does it mean? And, and we have these conversations pretty regularly with clients. Like, what do I do? What should I be doing? Is there something I should be doing differently? And the answers will vary depending on the person on, on the other, other side of that email or the phone.Speaker 3:
Yeah, because it is so easy to just tell people like , oh, don't look at, we hear people, oh , we don't look at it all. We just, just let it ride. But then when you hear just nonstop negativity, it's hard to not look at it and kind of see then , and then get scarce . So know , one , the things that we do is we use software ized to really dig in deep, to help people think about money and the way they should be allocated. And in times like this, it really, really tests you about how risky or what your portfolio should look like. But what do people do? Like, do you just turn off the news? Do you just say, you know what , to have faith in people like us, faith in yourself. Cause you see these articles where it's like, it's like , you know, the recession is inevitable, this is happening. It's why it's happening. That's eyeopening. And it's scary. Cause it means real. Look at the inflation numbers up over 8% gas averages are up over five hours a gallon. So where is the positivity? Where is that positive news? When, when these headlines are a little more optimistic, where do they getting optimism from?Speaker 1:
Well, I think one of the things that's happened over the past few years and really to be quite honest, over the past decade, plus let's call it 12, 13 years. People have forgotten what, and maybe not completely forgotten cuz there have been choppy markets intermittently in between. But for the most part, I mean the S and P 500 at this point is up over 400% cumulatively from the market bottom after the financial crisis and oh eight, no , not so for most people, for example, those that took an index approach, bought the S and P 500 and have held it for that period of time. They've done really well. So the idea of 20, 30% downturns were so far in their rear view mirror that maybe they just didn't realize that it could also happen again. I think ultimately what people really need to focus on and what the most important piece of this puzzle is gonna be is what is that money that is invested in the market now, what does that mean to you? Where does it fit in your particular plan? It's easy to look at a portfolio and say, I lost 10%. The real question is, is that 10% downturn going to negatively affect any other planning that you've done? Does it affect income and retirement negatively? Does it not get you to your goals now? Are you, do you have a shortfall because of that and also understanding perspective, you mentioned risk reli , which is a really powerful tool. I think the thing that it brings to light more than anything else's perspective, understanding that if this were to happen in this period of time, which is possible with a portfolio that looks like maybe how you're allocated today, it is possible. Then in the next six months, this could decline. It doesn't feel like it. And at least going back prior to this year, it didn't really feel like it could happen, but there's a possibility you could lose 10, 15, 20, 30% in a very short period of time. And does that, how does that make you feel? Ultimately it becomes kind of the , uh , the psychology side of our world. And I always joke with people and say, our job is to be a combination of a psychologist and an economist. At the same time, we have to understand emotions, but also understand how different financial metrics and things that are going on in the world affect the markets. Ultimately, you can't be completely turned off from the market. We're just not wired that way. Right? Like I'm not even, I would be lying if I told a client or told anyone that being in this business that I don't look at my own accounts from time to time. I mean, the easiest thing to do or to say is to say, set it, forget it, understand your plan, keep a long term perspective, all valid and all true. However, as human beings, we're not wired that way. We don't believe that we put things in a place that has risk of loss. And then we just forget about it and not pay any, any attention to it. It's just not, I just don't think it's reasonable to assume that people are gonna behave that way. Now perspective is everything having ongoing open dialogue about where you are, what you're doing, what your goals and intentions are and understanding how that is gonna affect an investment portfolio is very, very, very important. But in terms of what to do, I think for those that are, these conversations become very specific. Unfortunately there's no blanket answer to any of those questions, but if your plan remains relatively unaffected at this point. So for example, maybe you're 20, 30 years away from retirement and seeing a 20% downturn while could be potentially painful, may not necessarily throw things off track significantly. If you've already kind of projected and , and taken some of these things into account, maybe you have, maybe you haven't, but for those that are getting closer to retirement, that's where we see the most worry is that people in a 60 40 portfolio, for example, that have done fairly well over the past 10 years now, because of what happened in the bond market this year, which is not traditional, but has happened before we saw pretty much every asset class go down in some way throughout the first half of this year. And so now that's created a, a different perspective for those people who typically weren't U used to losing as much as the rest of the market, more risky investors. And now they're seeing returns that are somewhat similar in nature. So there's no perfect answer. What I can say is that there is certainly a lot of noise. What I would caution all investors to do is to not get sucked into what necessarily one news station publication blog, whoever it is that you follow, what they're telling you. If it's not objective data driven information, I would try to do your best to kind of take some of it with a grain of salt focus on the numbers. The numbers are what's important, but also just understanding where you're at in your specific journey in life and not trying to compare yourself, you know, staying away from that trap that we all fall into, which is keeping up with the Joneses when the market is top of mind and inflation and everything else it's on the news. You know , naturally it's a water cooler conversation that happens maybe amongst friends, amongst employees or people that you work with. The hard part is not get sucked into. Well, one person thinks this and another doing that. And then you get into this kind of hamster wheel of trying to trying to do what other people are doing or trying to discern who's right. And who's wrong. And the answer is that no, one's a hundred percent, right? Any of the time, that's just the reality that you live in when you invest in the market. It's been proven, I think time and time again, that no one can accurately predict what's gonna happen in the market. And it's very rare that anyone can perfectly time the market either. So I think disciplined approach, a planning approach to investing is probably a prudent way to go about this and much to the much to the chagrin of, of others who maybe over the past couple years, especially with the , the discount brokerage world kind of really opening up and people making money, doing a lot of crazy stuff. You know , that's not necessarily , uh , as possible maybe that it was a couple years ago. So I think discipline structure planning all went just like in the market. It kind of reverts back to the mean, at some point, I think the way we think about investing and how people are gonna participate in the market will also do the same. SoSpeaker 3:
These articles that come out, the doom and gloom or optimist, whatever article is, is there anything that they , they gain from this? Do they gain from scaring off investors when there's mass sells, do these financial institutions, are these argument , are they gaining anything from here? Or what , what's the, what is it just selling the news story ? So what's the purpose behind these conflicting stories left and right.Speaker 1:
Yeah. I , I think every , everyone wants to be right. Ultimately, and here's the thing, you know , over the past 13 years or so many people have said a lot of very different things. One thing I always find interesting is if you sell the sell off or the downturn in the market, if you just stay consistent with that story every year, eventually you're gonna be right once. Right. And the same would be true on the upside. So some people have just been generally consistent with their story because they feel that they're right, that their process and how they determine these market fluctuations is correct. It's not always true. There are instances where some publications where you have to be careful if you go on even some of the bigger publications like wall street journal, market news market watch , I mean, we can name a bunch, CNBC. They all to some degree have sponsored posts. That's how they generate their money. So I would say that as an investor, you definitely want to look closely at the articles that you're reading and making sure that they're not being written by those that might have some sort of influence or sale or, or something that's built in, for example, people that may be preaching the doom and gloom, there may be some kind of product or new type of investment vehicle that they're trying to sell. That gives you downside protection in a market environment like this, but also gives you upside like minimal risk of loss, but still participate in the market. Those are some of the things that we see out there doesn't necessarily mean that those products don't exist or don't work, but they may not be right for everyone. And so you just have to pay attention to what you're reading. Is it a blog post or is it something that's actually objective information that's designed to be educational in nature? And the same is true on the other side, right? There could be equity managers or specific fund managers that are looking for, for inflows. They want money to be invested in their fund. And so in order to do that, you have to give people a reason to do so. So there's not always going to be purely objective information out there, but you want to try to find things that are at least as objective as possible. And some of the websites I mentioned just to be clear, like they have that, but you just have to pay closer attention to which ones are sponsored or editorial in nature. And which ones are, or I should say oped opinion and editorial nature versus just based on objectivity facts. And I think going through a more detailed process in terms of generating that information,Speaker 3:
Those are all great insights, Ryan appreciate. So we really appreciate everybody listening in say, we know there's all kinds of mixed messages now that we know it's a tough time in the market. Any questions at all, don't hesitate to reach out to us any questions, if you're worried about your risk tolerance, if you think you're too risky, less risky, reach out to us. We have a lot of great tools that may help you kind of help you in your journey, in your investment journey. So make sure you click subscribe. Thanks again for listening and Ryan, thanks for your time today. Yeah, no problem. Thank you. Have a great week, everybody .