Pretty Little Hype Machine

In this day of multiple 24 hour news channels and 6 hour Super Bowl previews, one thing becomes clear to me. We live in an age where we are constantly bombarded by the modern day equivalent of "Barnum and Bailey." The media would have you believe that the hype and hoopla that surrounds an event is greater than the event itself. They try to create an environment where the slightest downturn is transformed into the deepest despair and pessimism. Meanwhile a solidly good thing is dressed up into being the greatest phenomenon since Jesus.

They like to create this roller coaster among the masses because the drama and sensationalism sells while gathering tons of viewers. This wild ride is further exacerbated due to the fact that the media holds great creditability as an official, accepted, and convenient authority about happenings in our world.

In my experience, I have found most of the jokers in the media to be pretty clueless when it comes to interpreting events or forecasting the future. In my mind, they live to stroke the flames of the herd mentality.

There is no better place to look in regards to this than the fortunes of the stock market. Back in the late 1990s and early 2000s, technology stocks were all the rage. Analysts, commentators, and hot shot fund managers told everyone that tech stocks were the only ones to own. They projected recent annual 50 percent returns well past 10 years into the future. Jim Cramer was telling everyone that the tried and true stock principles of Benjamin Graham were dead and that tech stocks were the only ones worth owning. It suddenly became fashionable to load up on fast rising stocks of companies that didn't have profitability or a good business case. The public eagerly bought in, not wanting to miss the tremendous gains. The bubble grew and grew with many people never expecting it to end. Then all the sudden, it popped. Leaving in its wake a vast destruction of wealth.

Today, we are faced with a similar situation. The housing bubble recently burst and suddenly everyone was calling in their debts. The chain reaction shut down respected brokerages like Bear Stearns and Lehman Brothers. It threatened to topple giant companies like Citibank and still is a concern for the big three US automobile manufacturers. The entire market tumbled and everyone went into a panic. People were selling like crazy and were dumbfounded by their losses. Pessimism set in.

In reality, I don't believe the situation to be as bad as people or the media make it out to be. If you think things today are dire then think back to 1930s. The world was going through a Great Depression where people drifted through the countryside exchanging a day's work just for food. We haven't reached that point.

Also you must look back in history to when market crashes occurred. Eventually the market rose again to prosperity. In time people once again believed the hot streak would continue forever. It's not as though these things haven't happened before. They appear to be somewhat cyclical.

You must think for yourself and not be carried away by the torrent of hype that others have sold you. Despite the cries of panic and despair, there is another perspective to adopt in regards to this situation. It is the viewpoint of optimism. The attitude that despite all of the bad things that happen, there is always an opportunity to be had. This opportunity is that market securities are now trading at a discount and will most likely ride high again. Much as they did after the Great Depression.

In the end, remember what Public Enemy said, "Don't Believe the Hype."