Financial Voices I Ignore – A Wealth of Common Sense

The deluge of information available to us these days is a double-edged sword.

There’s a lot of news, analysis, charts and opinions out there, but it can all be overwhelming if you don’t have an effective filter.

When it comes to funding, I have a few filters to understand what types of sources and people to safely ignore.

These are the types of voices and financial data I immediately ignore:

The stock market price of gold (or some other meaningless variable). Seriously, what’s the point of this:

Are people investing in mutual funds and ETFs priced in gold? Of course not!

This is the type of chart you use when you have no more ways to scare people out of the market.

Honestly, if you listen to Zero Hedge you get what you deserve. The site was launched in January 2009, three months before one of the biggest bull markets in history began.

This site has probably lost more money than anyone other than Michael Lewis since the Great Financial Crisis.¹

Using price returns instead of total returns. What else was wrong with that gold chart? It was price only and did not include dividends to show the total return.

In the long run, that makes a big difference.

Since 1950, based on price alone, the S&P 500 has risen about 8% per year. That’s a return of over 33,000%.

If you include dividends, the annual return rises to 11.6% per year. It’s a nice bump, but not a huge difference. However, the total return, including dividends, would be over 350,000%.

That’s a massive gap!

Here’s another example I see all the time:

Commodities have no cash flows. The stock market does.

You cannot compare the two asset classes based on price alone.

It doesn’t make sense.

In the immortal words of defense attorney Vincent Gambini:



People who are political about everything. I understand why there are conservative and liberal economists. But I prefer economists with opinions on economic policies, regardless of political affiliation.

If you look at everything through a partisan lens, I already know exactly what you’re going to say about certain issues.

The same is true for investments.

Everything is more politicized in the age of social media, but politics can be toxic to your portfolio if you allow them to sway your views on the markets.

Analog diagrams. The 1929 analogs are always my favorites:

This chart looks just like that chart! Oh no!

I guess you have to give people an A for effort with these, but come on!

Permabears and conspiracy theorists. Some might say that these people are useful as contrarian indicators, but those in the financial world always believe that the world is collapsing. The financial system is always one Fed wrong step away from total and utter collapse.

It’s an echo chamber for people who like to lose money.

This is an easy place to remove.

Boys with bow ties. A bow tie always makes someone sound 20% smarter. I’m only half kidding.

But just to be safe…

People have given up on a previous crisis. The inflation of the 1970s. The crash of 1987. The bursting of the dot-com bubble. The Great Financial Crisis. Some people still look back on the 1929 crash.

Understanding the history of the financial market, from booms to busts and everything in between, is important. However, certain people continually use past crises to frame the present situation.

Every market correction is not the next Lehman moment.

People fiat/dollar. Fed haters love to use this chart showing the value of a dollar since 1913 (when the Fed was created):

The value of a dollar has been destroyed! End Fed Now!

One might look at a graph like this and conclude that hyperinflation or system-wide collapse is imminent.

Or you might look at this chart and conclude that you need to invest in productive assets to hedge against long-term inflation.

Yes, if you buried cash in your yard, its value would have decreased due to inflation.

But if you instead put that money into short-term T-bills, effectively the equivalent of cash in investment terms, you would have grown your money above the rate of inflation by about 0.3% per year.

You would have done even better if you had invested in stocks or bonds.

The value of a dollar should decline over the long term. Why should a piece of paper protect you from the effects of inflation?

I ignore people who try to scare others with charts that have no context or intellectual honesty.

Further reading:
The news makes you miserable

¹I have a theory that The Big Short has probably lost investors – both professional and casual – a lot of money since its publication. I think people read that book and assumed you can find once-in-a-lifetime deals on a regular basis.