'World News' Spreads 'Main Street' Fear with Worst-Case Investing Scenario
Panicked selling by investors has caused sizeable Wall Street drops recently, but instead of presenting a calm analysis ABC seemed content to fan those fears on January 22.
âWorld News with Charles Gibsonâ presented the worst possible scenario to begin a segment called âMain St. Fears.â
â[I]nvesting in the stock market these days is not for the faint of heart,â ABC âWorld Newsâ anchor Charles Gibson said. âConsider this â if you put $1,000 when it was at its peak last October, that would be worth only $846 today. That kind of loss has plenty of people biting their nails.â
Buying at the peak would have resulted in losses over the short-term, but many experts say the stock market is still a good place to invest if your portfolio is well-researched and youâre in it for the long term.
Most people invest in the stock market for the long haul, not from the period of Oct. 9, 2007 to January 22. According to CNBCâs âKudlow & Companyâ host Larry Kudlow, you shouldnât take your money out of the market based on this bad news.
But ABC correspondent David Muir didnât making that case, instead he undermined the idea that people should âride out the market.â His story focused on frightened retirees like Marty Fritz who are beginning to dip into retirement accounts.
âWhen the market weakens along with the economy the advice is so often to ride the market â ride it out. But what happens if you are a baby boomer or a little older and you are getting ready to take advantage of your nest egg and you simply donât have the time to wait?â Muir asked.
His glass half-empty rhetoric painted a frightening image for an older American investor - one of the key demographic groups of the network evening news shows. âWorld Newsâ even trotted out one lady who is drawing off her retirement and feared for the worst.
Retired social worker Fritz told âWorld Newsâ âThe pond [retirement account] is getting smaller. If it goes too dry then I starve.â
Muir quoted one expert and did say financial planners recommended not panicking, to expect losses in the short-term, to stay diversified and to ride out the market. But he didnât sound convinced.
âFollowing that advice has become a real test of faith,â said Muir.
âWorld Newsâ didnât include the glass half-full perspective for viewers. If this same demographic now nearing retirement had started investing 20 years ago, right after the famous âBlack Mondayâ crash of Oct. 19, 1987, they might have increased their portfolio ten-fold.
âIf you had invested $1,000 in the S&P 500 index at the close of trading on Oct. 19, 1987, and reinvested your dividends, today you would have nearly $10,800, according to S&P's Howard Silverblatt,â wrote Kathleen Pender in San Francisco Chronicle Oct. 18, 2007.
As far as where the market is headed nothing is certain, but Kudlow shared his opinion on January 22. âWe may be closer to a stock market bottom than many believe,â Kudlow wrote on his Money$ Politics blog. âThis correction is already about 20 percent. There are a lot of great stock market bargain values. Smart investors always look to the long-run. Donât worry about timing anything.â