The financial media tend to focus their stories on emotional material rather than on which story is financially more compelling. Whenever they declare that a particular state of affairs will continue for many more years or indefinitely, then just about always we are very close to a major trend reversal.
For example, consider precious metal ETFs (GDX, GDXJ, SLV, and GLD) and Raw material miners (XME). These days you are being bombarded with many analysts and editors telling you after each pullback why new historic lows are likely in near future. It was the same story 4 years for the general equities.
In a true bubble market, which has already begun for most high-yielding assets, you’ll be reminded repeatedly why the long-term trend remains higher. It takes time for sentiment to catch up with reality. It usually can take several months and sometimes more if we have experienced a particularly notable extreme in either direction.
The most important developments in the financial markets are those which are ignored by the mainstream financial media. This isn’t because the media are shy to point out what they consider to be the most important trends. A month ago they had no problem blitzing investors with an endless parade of stories about why you should avoid emerging markets. Right now it’s the gold and silver.
The primary goal of financial media is to increase their audience and it is best achieved by understanding how to resonate emotionally with the public. Many investors make decisions which are largely subconscious since they don’t realize how dramatically they’ve been influenced by what they hear on a repeated basis. It is very challenging to identify and invest in an unpopular investment concept, which lowers the downside risk and maximizes profit.
The only thing obvious to the mainstream media is hindsight.