How Do We Tune Out the Noise?

Noise

During the first week of April 2022, there were two headlines about the possibility of a future recession that made me think about the noise coming from the financial media. These types of headlines are eye catching and normally draw an emotional response but often fall short on any constructive information that is beneficial for investors, their long-term portfolios, and their financial plans.

The first headline comes from CNBC – “81% of US adults are worried about a recession hitting this year, survey finds”.¹ This was a 2-day survey in March of “nearly” 4,000 adults.

The second headline was from an article on Bloomberg News – “U.S. Recession Seen Most Likely to Start Next Year: Survey” with a section in this article titled “2023 Looks Bleak”.² This survey had 525 respondents who identified themselves as either professional or retail investors in the US and Canada.

According to the US Census Bureau, in 2020 there were over 258.3 million adults aged 18 or older. Statistically, these two surveys included small sample sizes (4,00 is .0015% of the US adult population) and drew broad conclusions. And in these two articles, there was no information on how a recession impacts investors, businesses or even their employees. These types of headlines are nothing but noise.

At Prato Capital, we try to help clients and investors tune out this noise. Over the past several years we have discussed economic downturns and their impact on stock market returns for the long-term investor, click on the links to see the articles on our website:

• May 2019 newsletter, “The Flat Out Truth”.
• June 2020 newsletter, “Market and Economic Downturns”.
• March 2022 blog, “Preparing for Volatility or a Recession”.

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