Are Investors Really This...Primitive?

Investors Have More In Common With Our Primitive Ancestors Than We Might Think

Thousands of years ago our primitive ancestors looked up at the daytime sky to see an eclipse and were filled with fear. The heavenly occurance was viewed as the work of demons and wizards. For a people who often believed their lives and fortunes were controlled by the stars and the sun and the moon, surely a total solar eclipse must mean something of grand magnitude. Looking up at the daytime sky turned night, they must have dreaded how the eclipse might possibly uncontrollably alter their lives.

We would like to think we as a modern, thinking species would have long ago left these vestiges of fear and unfounded superstitions behind. This is not so.

The Stars Control Financial Markets

Sadly, on the day of the eclipse, across my newsfeed came two articles that can only be described as maddening, both in their contradictory suggestions and their primitive folly.

Within minute of each other, two articles were published by Money (owned by Time inc.), each suggesting the eclipse will have a dramatic impact on the stock market.  Amazingly, the two articles seemed to argue in opposition of each other.

  1. Stocks Have Soared 17% on Average After the Last 15 U.S. Solar Eclipses
  2. This Theory Says Eclipses Are Linked to Market Crashes

Aside from the inherent contradiction in the articles, the idea stock market movements could be caused by the stars should have died long ago. One would think a responsible and respected magazine would be a little more discerning in the headlines and articles they publish.

The Stories Influence Investors

Stories like these and others in the financial media do actually lead some investors to  make poor investment decisions, threatening their financial security. Unfortunately, not all of them are as easy to spot.

Since publishing the articles, apparently Money has pulled back a bit on the sensationalism, changing the headlines to be only slightly less melodramatic. The first being changed to “Solar Eclipse: What’s Happened to the Stock Market?” and the second to “Investors Beware: One Theory Links Eclipses With Market Crashes”.

Investor Responsibility: Protect Yourself

It is a sad truth that although licensed financial advisors are not allowed to give blanket advice to the masses, there is no such regulation on the media. As a result, bad and dangerous advice masquerading as journalism is common on all manner of financial websites.

The blame, though, cannot be laid solely at the feet of Money Magazine and other popular financial press. The reality is they publish these articles because readers click on them and read them. It is the general publics’ desire to find some hidden secret to investing which not only drives readers to look at the ridiculous, but also drives publishers to supply readers with the ridiculous.

Good Investing Advice Isn't Click Bait

When done right, investing advice doesn’t lend itself to gathering large numbers of excited readers. Investing strategy doesn’t have exciting surprises and dramatic twists. Investing is a slow process. Investing requires a consistent strategy. And investing is honestly quite boring.

  • Save consistently every month
  • Invest for the long-term
  • Diversify
  • Get professional help

These aren’t exciting and fun, but they have been proven to work. And for heaven’s sake, don’t respond when a guru or article says the market is going to crash or an investment is going to “soar 17% next year.”

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Joshua Escalante Troesh is a tenured professor of Business at El Camino College and the founder of Purposeful Finance. His career provides him with a unique insight on personal financial, having owned multiple businesses, being a VP at a financial institution leading up to 2008, and a Director of Marketing for a dot-com leading up to 2000.