Broker Check

Anatomy of a Headline

November 02, 2022

I saw this headline prominently displayed on the home page of Marketwatch.com a couple weeks back.  It’s representative many of headlines that you may be seeing even today.  Think of it as financial click-bait (or as I often call it – financial pornography).  These kinds of headlines can be very alluring and potentially misleading. 

Here’s the headline: “This hedge fund manager who made wining bets in 2020, says investors should brace for a decades-long bear market” MarketWatch 10/24/2022

Let’s break this down: 

We see hedge fund manager and we think (sub-consciously) “smart money”.  We’ve talked about “smart money” not being that smart before.  The real purpose of using the words hedge fund manager, is to start to reduce your skepticism.  Because your skepticism is reduced, you are more likely to read the article and believe what you are about to read.   

It’s a single hedge fund manager and I’ve never heard of him before.  I don’t even recognize the hedge fund.  I asked myself a simple question:  how many hedge funds are there.  A Google search reveals that there are 3841 hedge funds just in the US.  Why is the writer picking one manager out of 3841?

Bottom line, this article is all about predictions.   We recently talked about the allure of predictions and the reality that they are generally wrong.    When our skepticism goes out the window, we forget to ask the important questions.  Why should we believe this hedge fund manager?  Will his prediction be any better than any other prediction?  Should we pay attention predictions at all? 

This is a great example of the media mining data for the story they want to tell.  In this case, they want to tell this story primarily because it’s so “clickable” - it gets eyeballs on their advertisers.  They have a viewpoint that they want to share, and they cherry-pick the data or person as “evidence” to back up their story. Unfortunately, this scenario happens far too often.

Use your curiosity to go past the allure of the headline and think clearly about what this writer is trying to get you to read.  Will this guy’s prediction (or any prediction for that matter) really make any difference to your financial plan?  I don't think so.  

We’re here to help decipher these headlines.  Feel welcome to schedule some time if you’d like to talk more about headlines or financial click bait.  

https://calendly.com/jgilles-3/30min

https://calendly.com/wregenscheid