Recently, I've felt that our world was getting more and more sci-fi and frankly scary, or at least that's what infotainment, news, and the internet seem to be saying. Signs of cannibalism and inhuman humans have been sprouting up in a spate of zombie-like incidents. Some isolated, gruesome personal crimes and tragedies clustered together in a short period of time have alerted America to a forthcoming zombie apocalypse readily discussed on your local news and around the office water cooler. This reminds me of headlines we see regularly in the financial press.
One of my favorite quotes is from Blackrock strategist Bob Doll who said in the wake of 2008, "Statistically speaking, the world doesn't end that often." I don't think we're approaching the end of the financial world as we know it today, much as I find it amusing that the Centers for Disease Control made an official statement discrediting the potential for a zombie plague earlier this month. Perhaps the CDC is lamenting their whimsical decision over a year ago to use "Zombie Apocalypse" as an allegory for emergency preparedness.
Lately, I've seen headlines touting the death of stocks (cleverly timed to coincide with dismal May returns) and the end of home ownership in America. I liken get-rich-quick Facebook IPO press in the same camp. Things simply aren't that black and white.
Just as the ill-conceived forecasts of Dow 20, 30 or 40,000 were discreditable at market peaks in the late 90s, you need to take attention-grabbing headlines with a grain of salt. If it gets you to buy the magazine or click on the headline, the author's mission has been accomplished. Remember how news outlets were reporting that Y2K threatened to completely cripple the world as we know it? How computers would be unable to comprehend a new century? Turns out you didn't need to empty your bank account before the clock struck midnight. It was business as usual on January 1, 2000.
If you find yourself shaking your head as you are alerted about the next proof of zombies amongst us, carry over that same level of skepticism when you read financial stories with a simplistic scenario for exaggerated optimism or pessimism. Things are rarely as simple or straightforward as they may appear.
Gloom and doom and easy money are equally as improbable in most circumstances. If your neighbors start preparing for a zombie apocalypse you may want to keep your focus on more mundane but rational public health precautions such as staying up on vaccinations and flu prevention. Likewise, a systematic long-term investment process that avoids zombie distractions is our recommended strategy for investing success.
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Center for Financial Planning, Inc., and not necessarily of RJFS or Raymond James.