On CNBC immediately after the market close on Friday, the anchors breathlessly promised to go 30 minutes commercial free to get you "all the information you need to make investment decisions." They said this as though rifling through 30 minutes of stats were some sort of public service, like a test of the Emergency Broadcast System. Today the market swung back the other way, and the coverage is just as intense.
It always happens in times of extreme volatility--particularly when punctuated with big down days as we've seen in the last couple of weeks--that the ratings of CNBC soar, and so does traffic at the myriad financial news Web sites. Abruptly, the whoosh of bad news draws massive crowds, a huge run on up-to-the-minute information, facts, predictions. Not to be outdone, the newspapers respond with long pieces filled with analysis, anecdotes from real-life investors, and, usually, a more skeptical tinge. Presumably, investors are looking for that one nugget that will tell the tale for their entire portfolio--or at least give them something clever to say at the next party. "Hey the Nasdaq broke through its 200-day moving average of 3,500. That must be pretty significant, right?"
Uh, right. In truth, when the market is made choppy in the wake of huge a plunge in stock prices, that's a pretty bad time to start frantically digging for facts--which is an activity better done in quieter moments, without the weird mental distortions brought on by that stream of nasty-looking one-week charts flashing by.
Whatever the intentions, the cable/Web financial news firmament's incredibly short-term, narrow focus and hunger for the most sensational graphics to juxtapose against each other do nothing for clarity but add a great deal to the general feeling of anxiety. Yes, the Nasdaq remains quite a bit off its recent highs. But then again it's up hugely over the past three years. Doesn't that count for something? Even on Friday the broader Wilshire 5000, which is the market measure that the Fed looks at, was off its high by about 15 percent--bad, but not quite the much-discussed 20 percent official-bear-territory line. In the long run, there has been little sign of any collapse in corporate profits, which are far more important to long-term stock prices than the margin by which decliners led advancers in the last session. And it turns out that many individual investors don't trade in and out of stocks all day long; it turns out they really are in for the long haul.
All of that is cold comfort if you bought some specious stock two weeks ago in hopes that you could watch it double and sell it to a greater fool and that didn't work out and, well, you lost. Then again, if that's what you did, you'll find nothing on cable or the Web to save you. All we've had so far, really, is a bear market for dopes. I think most long-term investors are OK with that.