Ignore Negative Headlines

In this video, Matt and Chris from EWA emphasize the importance of ignoring negative headlines related to the stock market, your portfolio, or financial planning in general. They discuss how news outlets often focus on negative headlines to generate revenue and gain viewership.

They provide an example of a headline stating that consumers took on $1 trillion of debt in 2021, highlighting that such headlines can be misleading without context. They present charts showing that the net worth has doubled since 2007, and the debt-to-service ratio has decreased significantly, indicating a more positive financial situation despite the debt increase.

Matt and Chris stress the importance of looking beyond sensationalized headlines and seeking out information that is genuinely useful for your financial planning. They encourage viewers to be critical consumers of financial news and not be swayed solely by negative narratives

Video Transcript

Matt with EWA. Chris with EWA. So for today we wanted to go over really the importance of ignoring negative headlines pertaining to the stock market or your portfolio or financial planning in general.

So Matt, take it away with a few tips that would be helpful to share. Yeah, absolutely. Well first I think it’s very important to realize that these big outlets, news partnerships to have ads run through them and to generate revenue in multiple ways.

So typically how they get views is through negative headlines. Negative headlines that have drama, negative headlines that have bad news. Studies have shown bad news sticks to Velcro. If you throw a Velcro ball, it’s gonna stick.

But if it’s positive news, it’s like a bouncy ball, it’s gonna go and bounce right off. So with a company that’s number one goal is to make money, its job is primarily to create drama and create bad news. So one recent headline that we had to chuckle about was 2021 consumers took on $1 trillion of debt.

And although that fact is true, is that a negative in consideration with what has historically happened? And so two charts we want to draw your attention to. The headline said this was the largest increase since 2007. So we have these two charts that we wanted to point your attention to.

And the first is okay, what was the net worth back in 2007? So the net worth for the housing crisis and the financial crisis was $70 ,726 on average. Fast forward to the end of 2021, the net worth has been over doubled $150 ,788. Then if we look on the debt to service ratio, so if we look back in again, 2007, the 13 .2% was the percentage of debt payments versus disposable income.

And then if we look in fourth quarter of 2021, the same percentage has dropped nearly 25% down to 9%. So although $1 trillion of debt taken is a very catchy negative way to gain viewership, we’ll be put it in perspective that since the data from 2007 net worth’s have doubled, an overall percentage of income to debt taken out has lowered.

This is actually a positive news, but again, wouldn’t make money for a news outlet. So very important to realize most headlines, articles, news are meant to be negative versus providing information that’s actually of use to you and your financial plan.

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