If there’s one thing you need to succeed as an investor, it’s accurate information.
Unfortunately, that’s not always easy to get.
Investment banks and brokerages, for example, have conflicts of interest.
They purport to offer “unbiased” research on public companies while simultaneously soliciting these same corporations to underwrite their stock and bond offerings.
If you’ve ever wondered why there is a dearth of “Sell” recommendations on Wall Street, now you know. (To avoid offending potential clients, the worst rating investment banks generally give a stock is a tepid and actionless “Underperform.”)
You can generally get reliable information from Reuters, Bloomberg or a decent newspaper like The Wall Street Journal.
But the mainstream media often lacks perspective. Moreover, facts can be sensationalized, taken out of context or misreported.
And when the corporate media falls short of the mark, social media becomes a cesspool where millions of petulant, irresponsible and often anonymous users compete for attention with blatantly false, misleading or hyperbolic messages.
The result? People feel worse than they should about themselves and the world they live in.
Many actually get angry when they hear the truth.
In 2016, for example, President Barack Obama gave a speech to an audience of mostly young Europeans where he said…
We are fortunate to be living in the most peaceful, most prosperous, most progressive era in human history… It’s been decades since the last war between major powers. More people live in democracies. We’re wealthier and healthier and better educated, with a global economy that has lifted up more than a billion people from extreme poverty, and created new middle classes from the Americas to Africa and Asia… If you had to choose a moment in time to be born, any time in human history, and you didn’t know ahead of time what nationality you were or what gender or what your economic status might be, you’d choose today.
This should have been an uncontroversial statement since the facts allow no other conclusion.
Yet he was criticized by some – including many within his own party – for looking at the world through rose-tinted glasses.
Contrast Obama’s positive message with today’s populists – like Senators Bernie Sanders and Elizabeth Warren – who regularly warn us that banks, big corporations, and “millionaires and billionaires” have broken the system, rigged the economy and robbed us blind.
It’s a fact-free narrative that nevertheless resonates with millions of Americans plagued by unmet expectations, envy and resentment.
The populist message isn’t just disempowering, however. It’s grossly inaccurate.
Ordinary Americans today have a standard of living that is vastly higher than it was 40 years ago, when no one had – to give just a few examples – a personal computer, smartphone, GPS, broadband internet connection, music and video streaming services, Ultra HDTV, FaceTime, or overnight package delivery.
True, the pandemic – an economic and health crisis rolled into one – hit us like a bolt out of the blue.
Yet the popular notion that our quality of life has been stagnating or declining for years is not just demonstrably false. It’s absurd.
Our homes have never been bigger. Educational attainment has never been greater. We have never had more leisure time than we do now.
Many Americans today complain about the “death of democracy” while in zero danger of losing their right to speak, write, worship, assemble, organize or vote as they please.
The median household net worth in 1983 was $52,000. By 1997, it was $97,300. Today it is $121,700.
This is the stagnating middle class?
Heck, millions of Americans have pets with better access to healthcare than billions of their fellow human beings around the globe.
But look ahead…
The economy is increasing at the fastest pace in more than 30 years. Corporate profits rose over 70% in the second quarter alone. And increasing vaccinations – plus tens of millions with natural immunity – are leading us to a better place.
On social media, however, we live in a dystopian world at a horrible time. It’s tough to embrace this mindset and succeed as an investor.
After all, if you’re going to risk your hard-earned money in volatile and often unpredictable markets, you need an abiding conviction that – despite our many challenges and setbacks – the long-term outlook remains encouraging.
The good news? Thanks to scientific advances, technological innovation, democratic institutions and capital markets, it is.
The bad news? It sure doesn’t look that way on social media.
We are in the midst of what Harvard psychologist Steven Pinker calls “The Long Peace” and economist Deirdre McCloskey calls the “Great Enrichment,” a period of unprecedented peace and prosperity.
This is creating enormous investment opportunities.
However, you can only capitalize on them as an investor if you have good information.
So turn up the rational voices. And turn off the hysterical ones.
Click here to watch Alex’s latest video update.