ABC Misses Investment Opportunity as Stock Market Slumps
As the Dow Jones Industrial Average (DJIA) closed only a few points higher than it opened on June 30, ABC marked the end of a volatile month for stocks with a pessimistic segment on the market and personal retirement investments.
The Dow finished the month down 10 percent from June 2 and nearly 20 percent off of its October 2007 highs. But the June 30 âWorld News with Charles Gibsonâ focused on worried investors and ignored the upside to lower stock prices.
Anchor Charles Gibson kicked off the broadcast with a common media trend: comparing current economic conditions to the Great Depression. âYouâd have to go back to 1930, the height of the Great Depression, to find a worse June on Wall Street,â Gibson said.
âAnd as the stock market goes, so go your investments,â correspondent David Muir said. âGeneral Electric (NYSE:GE), down more than 34 percent since last Octoberâs high, and American Express (NYSE:AXP) down close to 40 percent.â
âAnd mutual funds, too,â Muir said. âAmerican funds Washington Mutual (NYSE:WM), down 18 percent, Vanguard (AMEX:VTI) down 17 percent. And with oil prices largely behind this, there is a real fear tonight this downward trend will keep going. Jack Strauss is like millions of investors who are counting on those 401(k)s.â
âYou watch your home going down in value and you watch your investments go down in value at the same time,â said Strauss. âUsually, itâs one or the other.â
But Muirâs reporting completely ignored the âgolden ruleâ of investing â buy low, sell high. Since retirement investing requires a long-term approach, a low stock market is not necessarily as bad as some in the news media have made it seem. CNBC host Suze Orman explained the concept on NBCâs âTodayâ show in November 2007.
âIf we just simply look first of all at the stock market, and I know itâs been going down and down lately,â Orman said on the Nov. 13, 2007 âToday.â âWhy if you are investing in a 401(k) plan, you have 10, 20, 30 years until you need this money â I said this over and over again â you don't want the stock market to go up. You want the stock market to go down and down and down. If it goes down, your money that you put in every month, it buys more shares. The more shares you own, the more money you make when the market eventually turns around and goes back up.â
That philosophy of the stock market has been overlooked by journalists who try to relate the daily value of the stock market to â
âSo for those of you who are investing for a long term, which should be most of you, if you are investing in the market â donât be upset about stocks,â Orman added. âAs long as you're in a good quality mutual fund, good quality stock, you have diversification both here and overseas â youâre doing great.â