'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.
â€śWorld News with Charles Gibsonâ€ť presented the worst possible scenario to begin a segment called â€śMain St. Fears.â€ť
â€ś[I]nvesting in the stock market these days is not for the faint of heart,â€ť ABC â€śWorld Newsâ€ť anchor Charles Gibson said. â€śConsider 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€ť
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 youâ€™re 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 CNBCâ€™s â€śKudlow & Companyâ€ť host Larry Kudlow, you shouldnâ€™t take your money out of the market based on this bad news.
But ABC correspondent David Muir didnâ€™t making that case, instead he undermined the idea that people should â€śride out the market.â€ť His story focused on frightened retirees like Marty Fritz who are beginning to dip into retirement accounts.
â€śWhen 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 donâ€™t have the time to wait?â€ť 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. â€śWorld Newsâ€ť even trotted out one lady who is drawing off her retirement and feared for the worst.
Retired social worker Fritz told â€śWorld Newsâ€ť â€śThe pond [retirement account] is getting smaller. If it goes too dry then I starve.â€ť
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 didnâ€™t sound convinced.
â€śFollowing that advice has become a real test of faith,â€ť said Muir.
â€śWorld Newsâ€ť didnâ€™t 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 â€śBlack Mondayâ€ť crash of Oct. 19, 1987, they might have increased their portfolio ten-fold.
â€śIf 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 $10,800, according to S&P's Howard Silverblatt,â€ť wrote Kathleen Pender in San Francisco Chronicle Oct. 18, 2007.
As far as where the market is headed nothing is certain, but Kudlow shared his opinion on January 22. â€śWe may be closer to a stock market bottom than many believe,â€ť Kudlow wrote on his Money$ Politics blog. â€śThis correction is already about 20 percent. There are a lot of great stock market bargain values. Smart investors always look to the long-run. Donâ€™t worry about timing anything.â€ť