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Even Scholarly Statistics Can Be Their Own Form of Click Bait

Mark J. Smith, CFP®, CPA/PFS, CIMA®
March 7, 2019

Click bait – those online headlines you can’t resist. They can be funny, intriguing, or panic inducing. No matter which category the headline falls into, if you click and react, the author has succeeded in their mission. When those reactions have the potential to wreak havoc on your financial plan, it’s time to take a step back and hit the pause button.


Even scholarly statistics can be their own form of click bait, twisted in a way that tells a story the author wants you to hear. Brian Wesbury, chief economist at First Trust Advisors L.P. in Chicago wrote a recent blog post which exemplifies this issue. Wesbury outlines the reactions people are having over reports about record high U.S. household debt, which stands currently at a record $15.9 trillion, higher even than in early 2008 when the number was $14.7. We all know what happened at that point – the Great Recession. So surely, one can infer that there’s another crisis just around the corner, right? That is enough to scare anyone and make them run out and make immediate changes to their portfolio as a defensive measure.


But hold on, Wesbury cautions. Things aren’t always what they seem. Introduce just one other variable into this scenario — household net worth — and suddenly, you have a very different viewpoint. As it turns out, household net worth has grown as well. The result is that household debt has fallen from 19% in 2008 to 12.7% now, and “households’ debt service is the lowest share of after-tax income since at least the 1980s.”


Something that looked really scary on its own was actually good news.


What is the lesson for all of us?


1. Don’t believe everything you read these days.

In a vacuum, any statistic can be needlessly alarming.


2. Don’t make emotional investment decisions.

Call us before you let panic set in. Our philosophy relative to investing money is goal-based investing based on sound, structured advice designed to meet your personal financial goals through all market conditions.


We’re here to help you see the big picture and assess what the numbers mean as they relate to you.


If you have concerns, contact us. We’re happy to talk through any recent events, what might be on the horizon, and discuss your overall position. We can make adjustments as needed but know that we have your best interests at heart and are always monitoring events at the macro and micro levels. We can advise you if and when your investment strategies need to change according to market events.

The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.This information does not purport to be a complete description of the developments referred to in this material. Links are being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

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