Stock Market Hype

ver the years, stock market commentators have seized upon many catch phrases in an effort to find a shortcut to discuss current and future market activity. Comments like “climbing the wall of worry” and others have been used for years. Often there has been a “flight to safety” and who can forget the many “October Massacres”?

While we all have read reams of this stuff in our years in the markets, the fascination with finding a way to describe market activity never wanes. Moreover, with the advent of fulltime TV coverage, and now the Internet, the need to fill even more space and time causes an ever-greater amount of hyperbole.

The question: is any of this meaningful -- or is it just unwashed hype for the masses? As an investor, at what point do you tune out? What do we make of all the yelling and anxious comments?

I am sure we have all found it amusing at times to hear a commentator remark that the market moved this way or that way, based on some absurd or repetitive activity. In reality, the overwhelming majority of us trade minimally, and if you are a mutual fund or other managed money program owner, many of the changes in your portfolio go unnoticed altogether.

Yet, it is difficult for even the most seasoned investor not to feel some pang of emotion when we hear for the umpteenth time the market moved up or down for some reason. Maybe today it was an Arab oil sheik claiming oil is in tight supply. Or that Russian analysts predict gold markets will be flooded with product. How about weather predictions for a cold/warm winter? Alternatively, that a certain government agency is coming out with a report on such and such?

Can we all agree the biggest hype is news from the Fed? Truly, how many of us have made one single adjustment to our portfolio based on what the Fed has or has not done? Open Market Committee reports are so old when made public that markets have made their own moves weeks before. And the Fed Chairman speaks in cryptic fashion about arcane indicators that most of us wouldn’t understand, and whose context is far too complex, to apply to our own portfolios.

We have traveled far from the days of Louis Rukeyser’s “Wall Street Week.” Personally, I rather miss the old show. In my book, it was head and shoulders over today’s offerings. Too bad PBS couldn’t find a way to work with Lou.

In the end, most investors rightfully place their faith, their portfolios and their future in the hands of professionals whose outlook is long-term. While the yelling goes on daily and attracts a certain segment of the market, its greatest attribute is its entertainment value. Beyond that, while the strength of Graham and Dodd and a long-term disciplined process might not sell TV ratings – it sure is comforting when the monthly statement arrives -- even more so, when the check or electronic transfer appears.

By Mark Generales, Senior Vice President - Melhado, Flynn’s Strategic Asset Management Group: William G. Roe, Regional Manager, Allen G. Oechsner, Senior Portfolio Manager, Brian D. Bensch, Portfolio Manager, Mark Generales, Sales Manager, Ruth Hauck, Service Manager This material has been obtained from sources we believe to be reliable; however, we cannot guarantee its accuracy. This material, and any opinions expressed, are for informational purposes only and constitute neither a prospectus nor solicitation of orders for the purchase or sale of any security. Melhado, Flynn & Associates, Inc. and/or its officers and directors may, at times, have a position in the securities mentioned above.