Investor Points of Few – When You’re Overweight Fear & Underweight Reality

By Alan Steel

I accept the media have a job to do, though at times it seems as if their “editorial portfolio” is overweight newspaper sales, and underweight financial market reality. 

Now that might sound like sniping. And in fairness, some years ago one of the better financial scribblers out there slapped me down on that point for comments I made that he deemed to be anti-media.

And he had a point, I suppose. He asked me, “Alan, do you think that instead of newspapers carrying headlines of the fatalities following the Titanic disaster, they should have focused on the fact that passengers had previously enjoyed a wonderful three day cruise?”

Hmmm…

But my frustration, and that of a fair few of us out here with more of a contrarian mindset, lends itself to what you don’t hear about in the press.

By example, it’s estimated the US economy is growing by 3% in real terms over last year.

Now if you include inflation at only, say 1%, the economy grew in visible terms (in financial market reality) by 4%, which means it increased over last year by over $740 Billion (the US last year was worth $18.57 Trillion).

That $740 Billion increase is equivalent to 12% more than Switzerland’s actual economy, and more than twice the size of Hong Kong’s entire GDP.

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Yet, the US is alleged to be in trouble. So, where is this trouble exactly? What’s driving the fear that’s pushing individual investor sentiment levels down to just 33% bullish about the markets?

It’s certainly not the 16,000 points the Dow Jones has picked up since March 2009, and that’s omitting the exponential value of the reinvested dividends that are so often forgotten about.”

Nor is it the fact that America is on the brink of yet another record setting quarterly earnings parade, record GDP output and record household net-worth and record cash flows.

Nope, that negativity is not coming out from what we’re measuring.

So, keep that in mind when you read your next headline, and ask yourself if what’s being reported – in light of the financial facts – actually makes sense.

Then check that opinion with someone who can offer you some good advice and a bit of independent direction.

Because after all, it’s your money we’re talking about here.

Alan Steel, Chairman, Alan Steel Asset Management

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