I
t would be a total lack of financial / economic knowledge on the part of the general divesting public … a seeming lack of the ability to think critically about the media inputs they use to make informed decisions. This really hit home hard today as I flipped on CNBC at the close and watched an interview with BlackRock President, Robert Kapito. BlackRock is the world’s largest asset manager, and they had just completed a survey of 27,500 investors that covered questions about their perceptions on the strength of the economy and retirement issues.
The answers were chilling
When they were asked about their feelings on the U.S. economy–was it worse, about the same or improved–only 24% said it was getting better. Thirty-eight percent said it was getting worse (unbelievable) and 35% thought it to be about the same. This is mind-boggling in light of the evidence that we have had dramatic improvement since the lows of 2009. Unemployment is down from 10.5% to 5.9%. Housing has recovered. Auto sales are booming and GDP jumped 3.5% in real terms in the third quarter of this year. Again, in the face of overwhelming evidence to the contrary, almost 40% of the respondents said things are getting worse.
What rock have these people been living under?
I believe it is safe to say, The Media Rock. I can only lay this huge discrepancy at the feet of the financial and political media. If you tell people, day after day that things are bad, many will eventually begin to accept it, even though it is a fabrication composed to keep a like-minded audiences hanging on your every word. I might add we might be in an even stronger economic position today, but good news does not build viewership.
In the final analysis, “the fault, … , is not with our stars, but with ourselves”, our own intellect. I fear where this is going to take us. Unquestioning, obedient populations have always met with bad ends.
But, to end on a positive note, with so much fear and misunderstanding out there, it would seem in the long-term this bull has further to run.
What is your take?
P.S. Here is an edited version of the BlackRock Survey interview–BlackRock: Retirement Crisis. CNBC, instead of pointing out the root cause of the “crisis” (financial illiteracy), chooses to highlight the lack of preparedness most have made for retirement (2/3’s of the respondent have no more than $25,000 saved for retirement…1/3 had nothing). None of the issues relating to the true lack of knowledge among investors are raised in this edited version.
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I live this every day! “Things are really bad out there” is a regular comment I hear.
I’d expand on your thought that the “problem” goes beyond the regular media and is now more in the world of the Internet & email. I receive an email or two forwarded to me every week from the fear monger guy selling his latest book / or subscription newsletter. He’s telling the scared investors how he can save them from the upcoming 1929 like depression, or whatever.
I’ve equivocated this to the traditional sales methods of fear and greed, but because the Internet / email is the new form of media people still believe what they read. First it was the covered wagon and the snake oil salesman, then everyone bot the pitch when radio arrived on the scene, then it was the TV pitchman – and now the Internet & email.
Bill,I’m in your camp here, no matter how small our slice is.
The same feeling of being worse off is one of the reasons that the Republicans are going to do well tonight. Apparently the Democrats can’t do any better than the media in dispelling the gloom. We have very short memories and people don’t remember how bad it was 6 years ago.
Today others won’t, so that tomorrow I can accomplish what others cant’. Jerry Rice
We can take in all that the talking heads have to say, but them we must create our own reality, offense and defense, to make our vision happen. This applies to planning as well as portfolio management.
I’m with you Bill.