Ignore the Noise

Ignore the Noise

January 25, 2024

When it comes to your money/investments.....IGNORE THE NOISE.

I have repeated this phrase over and over for many years.  You could say it's my mantra.  But why am I so persistent with this message? 

Well for the past 15 years I've watched the folks referred to as "experts" on the stock market and the economy make predictions about where they believed things were heading.  And, more often than not, they've been way off the mark.  For that reason, I refer to the opinions of the talking heads garnering headlines in our papers and on our televisions as NOISE that we, as long term investors, should pay no mind to.  Let me provide you some examples of the noise the "experts" make that has been way off the mark just in recent years...

Heading into 2022, analysts from the largest Wall Street firms on average predicted slight gains for the stock market.  What happened?  The market fell 20%.  Expert predictions = Noise.

Heading into 2023, these same analysts predicted the stock market would gain about 6%.  The market went on to return 23% for the year.  Once again, expert predictions = Noise.

Now it's not just Wall Street analysts that make noise....A lot of prominent businessmen and media outlets like to join in on the fun as well.  Take a look at some of these headlines from the past couple of years...

Jeff Bezos, founder of Amazon.  Brilliant guy.  Predicted a 2023 recession. Dead wrong.

Jeff Gundlach....manager of an enormous hedge fund...Brilliant guy.  Predicted a 2023 recession. Dead wrong.

Bloomberg...A highly respected financial publication....All but guaranteed a 2023 recession. Dead wrong.

Jamie Dimon....CEO of the largest bank in the country....Brilliant guy.  Predicted a 2023 recession. Dead wrong.

Jamie Dimon's own bank, JP Morgan Chase, publishes a "Guide to the Markets" and inside that report they show us that GDP growth is 70% made up of consumption....Meaning you and I as consumers are responsible for most of the economic growth in this country.  If that is the case we just need to look at the behaviors of consumers to get an idea of how the economy is doing.  Well, the consumer is consuming at above trend levels and has been for some time.  We can see that very plainly in this chart...

Once we got past the COVID lockdowns, consumers got right back to doing what they do best.....Consuming.  So if Mr. Dimon's own research report says economic growth is based on consumption and consumption is running at strong levels, why would he be warning of a recession?  Can't say for sure.  But what I do know is that scary predictions grab more headlines and garner more attention than optimistic ones do and for that reason we will always be inundated with negative opinions from the media and influencers.  Always have and unfortunately always will.  As humans we tend to pay more attention to things that unsettle us.  People of influence know this, and I think it's why negative headlines are so rampant.

For the media, attention trumps accuracy.  And this is why I always advise folks to IGNORE THE NOISE.  

While we cannot control what nonsense the talking heads are conjuring up, we can control how we react to it.  Or I should say how we don't react to it.  As long-term investors we should be heavily focused on one historical truth about investing:  The longer we stay invested, the higher our likelihood of positive returns. 

You can see that very clearly in this chart...

Get invested and stay invested.  Everything else is just noise.