I’m so giddy! No, not because it’s Thursday, silly. Want to know why? Because I can FINALLY use this picture I had so masterfully crafted over a year ago (yes, I am highly artistic as you can clearly see). The problem with this image was that when I created it, the market was red hot. Then it kept on getting hotter. I didn’t feel like I could use this and write until the markets started tumbling. And tumbling it has in the past week. The timing couldn’t be more perfect. So come join me for a pleasant introduction to financial pornography.
I honestly couldn’t be happier that the markets have been sagging. Yes, my own investments are all down, but I get to finally use my art. Yes… art. Please take another gander at that truly
horrendously-weird breathtaking visual I have created, just for you. That is what the world of finance looks like to me. Now especially more than ever. So, what is this post about aside from the scantly clad models framed around a bunch of dollar bills?
Models – like the ones featured above – are not true representations of the human species. The vast majority of people do not look like models. Ergo, models do not truly represent what a human being actually looks like.
In short, human beings depicted in the media through models/actors/beautiful people are not an accurate portrayal of the human race. It is a façade.
And just like models are not a true representation, neither is most financial news.
THE ZOMBIE APOCALYPSE IS UPON US
Well, the markets have been falling recently. Oh, you didn’t know? Just yesterday, Sam over at Financial Samurai was (half?) joking on Twitter about buying supplies from his local Home Depot to build his end-of-the-world-apocolypse-bunker:
In all seriousness though, no the world is not ending.
EXAMPLES OF FINANCIAL PORNOGRAPHY
You may have heard people whispering about the dreaded VIX index – the stock market fear index. It measures the volatility of the S&P 500 and when the VIX index is trending up, it supposedly means trouble is brewing.
And with headlines like this from Forbes:
You might be led to believe that there is something terribly wrong with the markets and that the zombie apocalypse is nigh.
Now, don’t get me wrong, I too like to (very often actually) fantasize about the zombie apocalypse. I daydream about how I would crossbow zombies square in the head with my badass crossbow just like Darrel from The Walking Dead (minus the raging racist 1 armed bigot brother). But that is fantasy. Make believe. However, what is depicted above is suppose to be the news. And they craft it to grab your attention and scare the hell out of you like The Walking Dead.
This is financial pornography at its best. Rather than educating, useless fear-mongering and noise is broadcast to the masses.
BACK TO REALITY
Patrick O’Shaughnessy over at Millennial Invest had a great post about what you need to focus your attention on (and it is not the mainstream financial news). He showed the following 2 graphs. This first one depicts the monthly returns of the S&P 500 since 1871:
Whoa! Look at all that volatility! Ugh, I can’t stomach that! Get me and all my money into a savings account right now!
Oh, but wait: there’s more. That graph above changes drastically once you take the monthly returns and compound them throughout the years:
If you’re invested for the long haul in the stock markets, market volatility and its random fluctuations should be of no concern to you. None of it matters except that you stay the course for decades.
In conclusion, just as models are poor representations of the human species, financial pornography is a very poor representation of useful financial knowledge.
I will leave you with this image of the infamous 1979 Business Week cover titled “The Death of Equities”
You know what happened after 1979? The start of the greatest bull run the stock market has ever seen. So tune out the noise. Don’t get scared by Jim Cramer. Don’t take advice from pundits on CNN Money. Take advice from J. Money instead on why you should just ignore everything. Seen any good financial pornography recently?