Financial Television Networks: Too Optimistic about the Stock Market?

Since the Dow reached its record high of over 14,000 it has lost about 50%, and the broader S&P 500 has lost about the same amount. Clearly there are millions of Americans who have lost a tremendous amount of money in the stock market whether it be through a normal investment portfolio or their retirement accounts, which often have a large percentage of assets in stocks or mutual funds. In the fourth quarter of 2008, the bottom fell out of the stock market like none of us have ever seen in our lifetime. It wasn't a one-day massive selling spree, but rather a seemingly never ending string of consecutive major down days in the market.

In the last few weeks all of the major market indices have bounced off their lows as investors begin to believe they are getting some good values for some stocks. The overall sentiment about the near-term economic prospects haven't changed much, but many think the stock market has discounted the terrible economic data that continues to pour in month after month. At some point the market has to bounce off the bottom, even if the move is temporary in nature, since the market never moves in a straight line in any particular direction.

I do believe that stock market rallies like the one we have seen in the last month or so are significant and should be reported on, but my concern is that the business television networks make it seem as if things are much brighter than they truly are for the average investor. Quite simply the average investor is still in a huge amount of pain because of the bear market in the past year and a half, and the recent move to the upside does extremely little to change the overall standing of their portfolio. It seems as if many of the financial television shows are talking up the rally as if it has erased the deficits that investors had and has run in a new era. Business news networks, especially of late, seem to want to talk about how huge of a percentage gain a certain stock has in the last month all the while ignoring that the stock has lost 90% in the past year. If you happened to be lucky and traded the stock right at the bottom then you certainly could have made a nice profit, but if you are like most people you are hurting in a big way.

In some ways I think it is good for business networks to be optimistic about the economy, since they can have a positive effect on consumers and their sentiment. At the end of the day though I feel like the business television networks owe it to their audience to report the market results as is, and keep things realistic. Be optimistic about the future possibilities of the market, but don't make major losses seem trivial.