February 22, 2018 | by James Behr Jr
Tuning out the noise of the media and those around you can be hard especially when it comes to your savings. Many people are subject to react to media headlines or recommendations and opinions from friends with their investments. Nowadays, people are inundated with even more news on their mobile devices, computers, TVs, etc. Where do most people find out general information about equity markets or find news on them? Generally, the internet, and, more specifically, Google.
Below is a chart depicting Google searches containing the keyword “stock market” over the last five years in blue overlaid with the S&P 500 in orange and the Dow Jones Industrial Average in red. A higher amount indicates more searches, while the corresponding number can be found below explaining what was happening in the news or markets during that time. You will notice the higher spikes in the amount of searches accompanied negative news and dips in the market, while the longer, flat periods came during positive growth in the market.
The spike begins at the start of February. On Friday, February 2nd, the S&P 500 was down 2.12% and the Dow Jones Industrial Average was down 2.54% in one day; the most volatile the market had been in a long time. As you can see, many people turned to the internet to find out exactly what was going on. The following Monday, the stock market was negative again leading to an even larger spike in searches about the stock market. Equity markets made national and even local news headlines causing many investors to panic.
What this tells us is that people are exposed to headline news when there is doom and gloom and less interested when there is growth in the markets. In fact, many stock market news outlets have admitted their ratings are higher when the market is going down. Getting caught up in the bad news may cause investor to stray from their current financial plan or “panic sell” investments to feel safe. We have written before about not allowing sensational media headlines to affect your investing decisions on our blog. The bottom line is that the fear of losing money is much stronger than the euphoria that comes as markets move higher.
As always if you have any questions please contact us at Info@bluebellpwm.com or call us at (610)-825-3540.