If you really want to see something funny, spend eight minutes this Sunday morning watching this 2009 video of Jon Stewart’s The Daily Show. This particular episode poked fun at Jim Cramer, Rick Santelli, and other financial pundits for telling people to continue to buy stocks in a raging bull market before the bottom fell out (View The Clip). The video is particularly amusing due to one of Stewart’s greatest quotes (in my opinion) “I would have a million dollars today if I followed CNBC’s advice . . . provided that I started with a hundred million dollars.”
With the Dow Jones Industrial Average hitting 16,000, it reminds me that two very powerful words are at the heart of most money decisions: Greed and Fear. For years, I have always shared that Fear is just an acronym for “False Evidence Appearing Real”. Fear makes us do squirrely things with our money. Greed, on the other hand, jerks at our emotions making us believe that the mirage of fortune and fame is just as easy as scratching off a million dollar lottery ticket (that could cost you almost $20 in some cases!). What makes me most worried though is that with the incredible amount of television and online media we are hit with every day, four particular words can cause you to make some seriously wrong moves. Be extra aware when you hear or see these over the next several months:
- PLUNGE- What images conjure up in your mind when you hear the word PLUNGE? The world PLUNGE makes me think about someone who just fell from the top of the Empire State Building. A great example of misuse is this article from the great column the Motley Fool where it suggests stocks plunged just a short while ago http://bit.ly/1cpjW7n. Is that amount really a PLUNGE?
- SOAR- Any bird can fly, but isn’t it only the eagles that truly SOAR? This is a Wall Street Journal article that recently said stocks SOARED after a jobs report http://on.wsj.com/1gvKbuH. The Dow Jones Industrial Average rose 167.80 points, or 1.1%, to a record 15761.78 on Friday, following a government report that showed the U.S. economy added 204,000 jobs last month. The blue-chip index advanced 0.9% for the week. Since when is 1.1% growth on anything a SOAR?
- BATTERED- Such a great word in the English language, but shouldn’t the word BATTERED invoke an image of two rams going full speed as they collide together? The USA Today had this post online a little more than a month ago: http://usat.ly/1a1HwSJ. The Dow fell 136.66 points, or 0.9%, to 14,996.48. The Standard & Poor’s 500 index dropped 15.21 points, or 0.9%, to 1,678.66 and the Nasdaq composite index dropped 40.68, or 1.1%, to 3,774.34. A .9% drop now officially means the market got BATTERED? What is this world coming to?
- CRUSH- I suppose this word can be used in both up and down markets, but a few months ago Seeking Alpha wrote this column: http://bit.ly/HDsawf. When I saw Florida State beat Idaho last weekend with an 80-14 score, I considered that a CRUSH. Stocks beating estimates can often be taken way out of line when you hear the word CRUSH without discussing the underlying story.
You’ll hear a lot of discussion on the major news channels in the next few months regarding the debt crisis, a peaking stock market, and potentially upcoming unrest in the Middle East. When it comes to your investments, don’t overreact too much one way or the other when you hear these words. Remember that media is just here to get ratings and using words like PLUNGE, SOAR, BATTERED, and CRUSH will surely keep you hanging on for more!
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