Last week famed investor Jim Rogers received a ton of press around his latest call that “The Worst Financial Crash You Have Ever Seen Is Coming”!!! I’m loathe to give him any more attention, but I do believe in full transparency so here’s the link if you’re so inclined:
News? More like entertainment.
Over the past few years there’s been a slow gradual decline in the value of financial news, especially from certain household names. As the fight for consumers’ eyeballs increases, both online and in the cable news world, companies are finding it harder to get (and keep) our attention. This isn’t meant to lump all financial news sources together; there are still a handful of folks who do quality journalism. But it is clear that some major financial news outlets have turned away from “news” and morphed themselves more into financial entertainment.
Every news outlet, from local news to major stations, knows that FEAR SELLS. This year the S&P 500 is poised for its ninth year in a row with positive returns. For these firms selling financial “news”, rising stock markets are boring! It’s no surprise that just this past August, CNBC recorded their lowest viewership since 1995. Secretly I wonder if they aren’t actually angry when the market continues to trudge higher. So what do they do, absent any real fear at the moment? Some of them try to drum some up!
Jim Rogers calling for a crash? Or consistently calling for a crash? There is a difference.
For those of us in a financial profession, Jim Rogers is a household name. As he started his career he formed a hedge fund with George Soros. During the 70’s that hedge fund had extremely stellar performance, especially compared with the broad market. Their record during those ten years speaks for itself and was so incredible that it explains why he is still a highly sought after commentator on the markets.
One of the great aspects about the current information age we live in is that the internet never forgets. A quick google search for Mr. Rogers will yield some interesting links:
2011: “100% Chance of Crisis, Worse than 2008”- Jim Rogers
2012: “It’s going to get really bad after the next election”-Jim Rogers
2013: “You better run for the hills”-Jim Rogers
2014: “Sell everything and run for your lives”-Jim Rogers
2015: “We’re overdue for a stock market crash”- Jim Rogers
2016: “Biblical Crash dead ahead”- Jim Rogers
See the pattern?!?!?!
He’s been making these hyperbolic calls for a crash for the past six years! Sadly, it’s important to remember that Jim Rogers is NOT the only market commentator to continue to bang the drum for a market crash. There’s a laundry list of commentators who seem to have made a career of trying to scare the bejesus out of people, and then never apologizing for when their apocalyptic prediction doesn’t come true. Many of these folks are richer (and admittedly smarter) than I will ever be. But in my opinion, they aren’t trying to help you, they are trying to entertain you and feed their own egos.
Someday they will be correct, as even a broken clock is right twice a day. Then they will be heralded as the best soothsayer in the land, and gather even more attention. “Great, I can’t wait” I say sarcastically. The reality is markets typically fall on average just about 15% every year. During a recession they usually experience pullbacks of over 30%. However one’s ability to correctly predict the severity and the timing of that correction has eluded all of us.
In closing, I find it quite ironic that on the same day that he’s calling for a major crash that this headline was published:
“You just doubled your money if you invested at the 2007 market peak” (https://www.bloomberg.com/news/articles/2017-09-26/doubling-your-money-in-stocks-by-buying-at-peak-of-a-bull-market).
In short, IF you had the absolutely worst timing on when to choose to invest and IF you unwisely put all of your money into just the S&P 500 the day before the stock market started to fall during the financial crisis, and IF you never sold or touched that investment, then as of yesterday you basically doubled your money since 2007. While we’d never advise anyone to ever do that for a myriad of reasons, ten years later you’d be sitting on a nice profit. While I can’t prove it, something tells me unfortunately Mr. Rogers’ article will garner more attention than the Bloomberg article. Just remember that not all articles from the financial world are news. Much of it is entertainment and there’s is a big difference between the two.
Derek Amey serves as Managing Director and Portfolio Manager at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail him at firstname.lastname@example.org.
The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Derek’s opinions and comments expressed on this site are his own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.