As you watch television tonight or read articles about what is going on with the stock market over the weekend, please keep a few of these bullet points in mind:
- Markets do not rise linearly. They zig, they zag, they move sideways, they crash, they correct, they bull, they bear, you get the point.
- No one knows what happens Monday or the next day. Markets are random. Random on the way the up and on the way down.
- It doesn’t matter if we correct 10% or 20% – the pain from any loss (paper or actual) is going to hurt way more than any gain that you might have had up to this point.
- If you are not a trader, you must think long-term.
- Drawdowns in a portfolio can last a very long time.
- Some financial publications provide sound advice and others much confusion.
During the summer of 2017, the low volatility in the market led Bloomberg to write an article about how traders were leaving the office early to play Nintendo and watch their kids play sports. Fast forward to the winter, and equity traders are no longer bored.
On the subject of boredom, no one is more excited in this selloff more than the financial media. They are not managing money for clients so when the markets are calm, they talk about how Amazon is eating the world or how General Electric cannot find a bottom. They know that you know the names of this stocks, so they always talk about them. They get the bull and the bear to discuss where they think a particular market is going.
When markets pick up in volatility, they ask these same pundits for what they are doing with there portfolios. When are they buying? Are they selling? Is this the top? Where is the bottom?
CNBC and Bloomberg are both competing for your attention and keeping you engage what matters to their sales. They know that they are up against some stiff competition, so they have to be theatrical in their production to keep you coming back. Who are there competitors: your social media timeline, a great book, your loved ones, or watching Black Mirror on Netflix (I like this show but please do not watch the 1st episode).
I regularly listen to NPR’s Hidden Brain podcast and one of the episodes, titled Buying Attention, goes into this concept of “attention merchants” and how businesses need to keep your attention at all costs. Just think of the SuperBowl ad prices.
Think about how many times you have looked at stock prices this week or turned on the cable news to see whats going on with the market. Articles are being written to get you to click on them. “The Quants are to blame” or “the Dow dropped by the most in blah blah blah.”
Click the link if you would like to listen to NPR episode. I promise it is not too long and worth a listen if you are into podcasts. I listen at 1.5-time speed.
The book that they discuss on the podcast is The Attention Merchants: The Epic Scramble to Get Inside Our Heads by John Wu. Below I copied and pasted the profile on the book. I plan on reading this book in the not so distant future when I can spare some of my attention.
Feeling attention challenged? Even assaulted? American business depends on it. In nearly every moment of our waking lives, we face a barrage of messaging, advertising enticements, branding, sponsored social media, and other efforts to harvest our attention. Few moments or spaces of our day remain uncultivated by the “attention merchants,” contributing to the distracted, unfocused tenor of our times. Tim Wu argues that this condition is not simply the byproduct of recent technological innovations but the result of more than a century’s growth and expansion in the industries that feed on human attention. From the pre-Madison Avenue birth of advertising to the explosion of the mobile web; from AOL and the invention of email to the attention monopolies of Google and Facebook; from Ed Sullivan to celebrity power brands like Oprah Winfrey, Kim Kardashian and Donald Trump, the basic business model of “attention merchants” has never changed: free diversion in exchange for a moment of your consideration, sold in turn to the highest-bidding advertiser. Wu describes the revolts that have risen against the relentless siege of our awareness, from the remote control to the creation of public broadcasting to Apple’s ad-blocking OS. But he makes clear that attention merchants are always growing new heads, even as their means of getting inside our heads are changing our very nature–cognitive, social, political and otherwise–in ways unimaginable even a generation ago.