I recently wrote about the new record high for the Dow Jones Industrial Average and tried to be as thoughtful as I could. But it wasn’t easy, considering the feeding frenzy on the topic and the need to ascribe cosmic significance to the event.
The high was either proof the recovery is firing on all cylinders, or a warning that the bottom is about to fall out.
Frankly, I think it’s neither. But fat chance selling that idea to a major media portal.
That’s because there’s a dirty little secret of financial media: We are bipolar creatures who vacillate between fear and greed, with no middle ground between.
We do this because talking about a 4% to 7% annual return for the S&P 500 over the next five years isn’t all that sexy. Who’s gonna click on a headline that promises to turn $10,000 into $16,000 by 2023?
Unless your target is a zillion or zero, it’s not “interesting.”
Unfortunately, this way of thinking is either willfully naïve or just plain delusional. The reality is that clear tops and bottoms are rare, and the vast majority of our time as investors is spent in between the two.
There are countless Wall Street truisms about this: that picking tops or bottoms is the most expensive job in investing, that Wall Street is peopled by analysts who can identify one big inflection point in a row.
Unfortunately, financial media sometimes feels like a store full of broken watches. Depending on when you walk in, you might find one that is “correct” … but in a little while, the product in question reveals itself to be a piece of junk.
So keep that in mind as you read my take on the Dow or … well, anything. I try to guard against the hucksterism, but it creeps in sometimes. And even when it doesn’t, I can be (and often am) painfully wrong.
Anyway, back to the circus.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.