on March 14, 2023
“Sell now!”
“A recession is imminent!”
“Consumers are struggling more than ever.”
Financial news media often paints a dire picture, regardless of whether the news at hand is good or bad. Even when presented with good news, it’s often framed as an impending economic disaster, or an opportunity that will pass soon. This tendency can be confusing and disheartening for investors, leading many to overlook positive information and instead focus on the negative aspects of financial news.
How Financial News Media Frames Good News
The media is known for its sensationalism, and this holds true for financial news as well. Today, it’s all about generating clicks, and the way you do that is, simply, through fear and anxiety. When the stock market is enjoying a prolonged period of success, for example, the media may pose the question of when the “red-hot stock market will plummet.”
This kind of framing makes it sound as though investors should sell their stocks as soon as possible. It ignores the fact that stocks have historically risen in the long run, and it’s sensible to hold them over extended periods of time, weathering any dips along the way.
When it comes to news about the economy or other markets, media outlets tend to take a similarly pessimistic view, ignoring small, positive stories (even if positive news happens more frequently!) in favor of stories that present the worst case scenario. By creating a narrative of impending doom, these news sources can heighten their readers’ fears and drive their viewership.
What Smart Investors Do
It’s important for investors to be aware of this tendency in financial news media and to think independently, rather than taking this dubiously framed news at face value.
Before making any investment decisions, talk with a financial advisor and make a conscious effort to take a long-term, strategic approach. As we’ve discussed in past blog posts, it doesn’t pay to let the market’s day-to-day fluctuations get to you.
By looking beyond the immediate news headlines, investors are more likely to craft a sensible financial plan tailored to their own goals and risk tolerance.
Financial news media does its best to present the most attention-grabbing stories, even if these stories paint overly-dire pictures. Smart investors should be aware of this tendency, and always do their own research and think critically when evaluating financial news. Avoid quick, rash decisions, look beyond the immediate news headlines, and think long-term. Your patience and prudence will pay off.