This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See them all.Bad news sells. Good news is boring.
Inside media types will tell you that they are guided by this basic rule: If it bleeds, it leads.
The financial media is no exception.
There is a steady drumbeat of news about a "deep recession" or even another "great depression." How many times in recent months have you read about the "market crash" or the "financial meltdown," all meant to convince you that it really is different this time?
Is it really?
In September 1998, Newsweek carried a major story about an "unprecedented" worldwide "economic convulsion."
Fortune predicted "a fundamental change in the world's economic condition" in September 1998. Time Magazine, in June 1970, opined that we were in "the worst economic conditions since the Depression."
A "panic on Wall Street" was headlined by the Philadelphia Inquirer in October 1987.The list is endless.
Here is data that is factually accurate, but it is boring. It doesn't get mentioned in the financial press, much less "lead":
- The two-year annualized loss in 1973-1974 for an all stock portfolio was greater than the two year loss for the period ending October 30, 2008 (22% vs. 18.64%).
- The worst four-year annualized loss for an all stock portfolio in the past 50 years was less than 2%.
- The four-year annualized loss for an all stock portfolio for the period ending October 30, 2008 was approximately 1%.
- Over any ten year rolling period in the past 50 years, this portfolio never had a loss. Its average annualized return was over 13%.
Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books, 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books, 2008).
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Reader Comments (Page 1 of 1)
1-15-2009 @ 5:20PM
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