Great post here from the Irrelevant Investor that uses recent history to show poorly the financial press predicts near-term stock prices. 

Here's how he opens:

Could today have been a more obvious “sell the news event?” Of course it wasn’t obvious to me in the morning, and if we closed at the highs I wouldn’t be writing this, but come on. Could this have been any more obvious?

The S&P 500 fell 1% from its highs, and closed down a modest 0.11%. But the NASDAQ 100, which has been the leader of this market, fell more than 1% and had its second bad day in the last four sessions. This could be the top.

Buuuuuuut it might not be.

We are always searching for patterns and suffer from loss aversion (feel losses 3X more than gains), so when markets drop and the punditry come out with the scare headlines that "this could be the beginning of a correction," our spider senses tingle and....are usually wrong. Read the article to see how this pattern of market drops followed by "sky is falling" predictions has been followed by market gains (obviously at some point this pattern will reverse but good luck predicting it). So take those stock trackers off your mobile device and add the app Headspace and quiet your mind with some meditation:) 

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Interested in Behavioral Finance? Check out our other blog posts on the topic (we like it too!)

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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