When I read what’s been happening in the financial markets lately, I’m embarrassed to be a financial journalist. Actually, it’s not Wall Street’s behavior that embarrasses me, it’s the way it’s being covered.
Why do journalists insist on covering the market as if it’s a horse race? It’s not. People who are invested in stocks should be committed to keeping their money in for years, not days or weeks. So a bad day, a bad week, a bad month or lousy year shouldn’t mean much. And yet journalists treat every Wall Street tantrum or triumph as if it’s huge, huge news.
What is particularly frustrating is how the financial press has whipped investors into a frenzy of late with their breahtless coverage of the subprime meltdown. Reading the stories, you’d think that Wall Street was on the verge of reentering the Great Depression.
But nothing could be farther from the truth.
Here’s some stats from last week to put what’s happening in the markets in perspective:
The Standard & Poor’s 500 Index is up 4.31% so far in 2007. At this time last year, the index was up 3.75%.
The Dow Jones Industrial Average is up 7.35%, compared with 5.29% in August 2006.
And the NASDAQ is up 6.68%, versus being down a negative 2.95% last August.
As you can see, all the major market are doing significantly better this year than in 2006 at this point in time. That’s especially true of the NASDAQ stocks. But you sure wouldn’t know it from reading the papers.