You’d Be Outraged If You Knew How Easy It Was To Get You To Click On This Headline

clickbait

In case you missed it, you can watch an “At a Glance” summary of this week’s blog posting here.

Stella Young died at the age of 32.

She was born with what is commonly called “brittle bone disease.” The actual name of her disease is a much longer, unpronounceable “osteogenesis imperfecta.”

Here’s what I loved about Stella. She didn’t want your sympathy. And she didn’t want you to look at her and think “oh I’m so inspired, look at that little women in that wheelchair.”

She actually wanted you to laugh at her. And the louder the better.

I saw something from Stella that I didn’t expect. She pointed something out about an investor’s mindset that made me pause and really think about what investor’s are up against today.

Stella’s thinking inspired me to talk to you about a very important sector of the stock market.

A sector that is capable of moving up four or five hundred percent during the same time the S&P 500 could maybe muster a 100% move.

This trillion dollar plus market cap sector stands out most in its ability to force you to rethink how you’re thinking.

Let me show you.

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Imagine you live in an online society. Because you do. Not entirely of course. But if you buy newsletters and log on to the internet to connect with people via Facebook and Twitter for example a part of your society is online.

Now here’s the idea Stella floated past us all during her Ted talk in April of 2014. Stella said, “What if you had the disability and not me?” Yes you. And what if your disability was defined by the society you live in. In fact what if the disability you have was created by the way the society you’re part of was organized.

And then Stella said it, “What if we are more disabled by the society we live in then by the bodies we inhabit?”

Your Society Disability

And what if you didn’t even know your were part of this society disabling you? And you didn’t understand how the organizing of this society was actually making you poorer?

There is research around how a disability – which we often think of as a missing arm or leg or being in a wheelchair – might actually have more to do with the way our society is organized.  

And what if the true disability was the way we invested because of the society we were part of?  What if your investment society was actually disabling your future?

There’s new research that talks about the social model of disability. And though it doesn’t talk about investing societies, I think we can learn from it.

Because the societies we participate in can determine how you behave. Including investing.

Let me explain.  Woman in wheel chair

If you are reading this posting then you most likely have money at risk in the stock market. And you’d like to make sure you stay on the right side of the market. Right?

So what if you were part of a society that tried to scare the shit out of you weekly, if not daily?

Why? So that society could make money on clicks and subscriptions?

I’m asking because I think you might already be exposing yourself to these dangers. Let me give you an example.

Just last week I saw a dozen article titles and subject lines about emerging markets. And every single one of them was scary. Here are four from last week.

“Is Emerging Markets About to Submerge?”
“Emerging markets just had a pretty bad technical breakdown today.”
“Emerging markets are breaking down.”
SoGen thinks emerging markets are breaking down.”

Click bait headlines

Every Subject Line You Read Matters

Now what’s going on in your brain if you own emerging markets and you’re reading these subject lines, titles and banner ads?

That’s got to be very scary. One might think, “I’m about to lose everything. And just in case I better read the article.” Well those article titles and subject lines are part of that society that you might not be aware of. A society that is organized in a way to deliberately scare you. A society that might be hurting your investment performance by almost always keeping your brain in a “fight or flight” mode with cortisol (the stress hormone) flooding your brain.

more click baiting headlines

Kimble Charting Solutions

Well, this just happened last week, and last week’s choice of cortisol dumping was emerging market click-bait headlines. So let’s take a look at them. Here they are again with the images that came with the headlines.

The first headline comes from Chris Kimble and his Kimble Charting Solutions Blog, his title was, Is Emerging Markets About to Submerge?” And below is the price chart that Chris included in his post.

So you know, Chris is a trader. So he’s looking for small shifts and changes. And to be clear, I’m not a trader. And I don’t think you should be either. Increased buying/selling frequency almost always decreases returns. There are exceptions but they are rare.

Is Emerging Markets About to Submerge?

Bespoke

The next headline, “Emerging markets just had a pretty bad technical breakdown today, comes from Bespoke. You can see the price chart they used below. Please remember all of these blogs want you to listen to them. And to be fair, I want you to listen to me too. I just don’t want to scare you into listening to me.

So one thing investment blogs can do is to scare you into reading their material. I get it. The noise in the world today is overwhelming. Scaring seems to be the only thing left for blogs to use. Of course not all blog use scary click-bait headlines.

emerging markets

Porter Stansberry

And then I saw this headline a day later, “Emerging Market’s Are Breaking Down.” This headline comes from Porter Stansberry. This is the price chart Porter’s crew used to show the “breakdown.”

emerging markets porter stansberry

ZeroHedge

And then lastly, Zerohedge took a swing at Emerging Markets with the title, SoGen thinks emerging markets are breaking down, here’s why.”

I don’t know what Emerging Market’s is going to do. And I know from studying Emerging Market that they have more volatility then say the most developed market on the planet, like the S&P500.

So maybe Emerging Market’s will take a breather. They are up 60% over the past two years, while the S&P is up 42%. This would make sense. But does that mean you jump over to financials now? Or housing? Or somewhere else?

Below is a price chart comparing Emerging Markets (EEM) and the S&P500 (SPY) over the past two years. Emerging markets is the blue line. And SPY is red.

Emerging markets vs sp500

I live in the same society you do when it comes to investing. Meaning an Internet-based society that is 24 hours of click-bait headlines getting thrown in front of us.

What can you do?

Step back and look a the big picture.

Below is price chart of EEM (emerging markets) with dividends reinvested. As you can see EEM has broken out to new lifetime highs. Lifetime highs are not a sign of imminent demise.

They are a sign of strength. Also, when an investment is hitting, breaking through and establishing new lifetime highs, there is almost always an increase in price volatility. This goes for all investments and not just Emerging Markets.

As you can see in the price chart below. Emerging Markets (EEM with dividends reinvested) has broken out to new lifetime highs. The green horizontal line is the old lifetime high price for EEM.

The chart below is 12-years of data. The take away, get price chart of the big picture as fast as you can. It will counteract your cortisol levels.

Emerging Markets 12 year price chart

The Science of Clickbait…

There is a lot of new emerging science about how subject lines and article titles generate emotions like mad, sad, glad, hurt. And the most profitable click-bait emotion is fear. And the Stanberry’s of the world know it. And our brain’s fear response is a very real reason why people subscribe to three, four, or five investment newsletters.

They are subscribing out of a reaction to their cortisol levels. And it works. Once subscribed an investors cortisol level will drop. That is until tomorrow’s headlines.

If you want to read more about the emerging science of clickbait you can also read this one from the University of Texas, Austin. Or you can read this one from the American Marketing Association.

This is real and very few financial observers are talking about it. Companies are at war with each other to capture your attention. And. You. Are. The. Loser.

science behind click-bait

Learn to fight back by following a powerfully simple investment approach. If you’re looking for clarity, you’ve found the right place.

In Your Corner,

RCPeck-Dig Signature.JPG     
RC Peck, CFP

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