Posts Tagged ‘financial media’
Can you trust the financial media for reliable financial reports?
Is there no voice of reason left in the financial media? The financial media operates with incentives that are not in the best interests of investors. The financial media – internet, broadcast and print – have an agenda, like any business, to increase their revenue. They do so by running stories that will maximize their audience and, accordingly, their advertising revenues. Sometimes they have a political agenda as well.
Headlines are created to stimulate our interest, or at the least, our curiosity. These motivate us to keep watching or keep reading with hope we will buy their publication or spin. We must heed the feeling of sensationalism and trust our intuition.
Aside from increasing unemployment, the most talked about economic problem is housing. The forever optimistic National Association of Realtors (NAR) keeps pointing through the media that the worst is over. But if you look closely at history, the real story is always different. Except for two spectacular housing booms – the first after World War II and the second starting in 1998 – residential real estate appreciation has been unimpressive after figuring in inflation. Technology has allowed builders to nail up more houses faster, ensuring that supply never gets too far behind demand (and often gets ahead of it). The combination of increasing foreclosures and unemployment insures an increasing supply today. The reverse wealth effect and economic malaise insure demand is beaten down. In spite of what NAR would have us believe, does anyone believe housing prices are going to stabilize on the downside anytime soon?
Amherst Securities Group LP, the New York-based mortgage-bond analyst said in September of this year that a “huge shadow inventory” which is about five-and-a-half times larger than 2005’s national tally of delinquencies and foreclosures – threatens to further destabilize a housing market that had shown signs of righting itself over the summer.
While housing is only one factor in the US economic recovery, it’s the number two issue. As with any financial media you follow:
1. Be smart- temper what you read or hear with your knowledge of the markets and economy
2. Think long-term – don’t get caught up in the “headline of the day”
3. Talk to someone you trust- someone steeped in the knowledge of the markets and economy that has no self-interest
Asset Strategies Portfolio Services, Inc.
2635 Lapeer Rd, Auburn Hills, Michigan 48326 | Phone: (248) 373-9900
