Media coverage of the stock market (rant)

The media’s attention to every movement in the stock market is ridiculous. A stock’s price is simply the price at which people today are willing to buy/sell an ownership interest in a company. A stock is an asset, not much different from a house, car, computer, etc..

When the stock market drops 8% over a two week period the media starts flipping out. “A recession is coming! What’s wrong with the economy?!” While no one wants their investment to drop in value, stocks fluctuate in price just like every other asset.

Does anyone freak out when Best Buy drops a computer’s price from $500 to $460? Or when a car dealership cuts the price of a new car from $30k to $27,600? Or when a house on the market drops its price from $250k to $230k? No. That’s just normal price fluctuation. But if you see stocks drop by that amount the economy is crashing!!!

Look at the Dow Jones graph from the time you were born to present day. The graph is full of ups and downs, but the long term trend is way up.

The media knows this, yet they sensationalize every good run and pull back. Don’t let the fear mongering affect you. It’s empty bullshite. In fact, unless you’re about to retire, you should welcome pullbacks in the stock market. It just means you’re getting a better price (even if you are about to retire, your portfolio should have less of a position in stocks as it did when you were 30, so market fluctuations won’t have much of an impact on you).