Unlike in the US where, if there was a selloff in the stock markets, you would hear it ad nauseum from the CNBC, CNN, Bloomberg etc., where experts weigh in on the reasons causing the drop in the Dow, S&P 500 and the Nasdaq – in China, it is a different story. Last week, Chinese shares began their worst sell off in three years and none of the news outlets made any mention of tweets from Trump on the trade talks between China and US, that caused the chaos in the first place. State run media outlets kept mum and posts on social media outlets like Weibo and Wechat were quickly deleted. Of course, when the news is good and the markets rally, the same outlets are quick to discuss at great length how policies from Beijing are working well and adding to investor wealth.
Manipulating the media and investor sentiment is a quirky way to maintain financial stability but that is how the Chinese do it and it’s unlikely to change in the near future. While the US is never going to go that direction as the Chinese, is there a lesson here for investors and the stock markets whose volatility and whipsawing is getting painfully undesirable?
Future Wealth’s View
The first thing we opine is – for the stock market to ignore all Trump tweets. It would be a great day when the sun rises and all of Trump tweets go into the spam folder of everyone’s Twitter account. Of course, that is not going to keep him from repeatedly tweeting until someone from Fox realizes something is wrong when the President has not tweeted from 5am to 8am on any given day.
Onto more profound issues – blocking and filtering news is really not the place for any administration – be it China or the US or any country for that matter. However, it behooves every investor to be cognizant that news flow or lack thereof, is not always representative of the prospects of a company. Here is where sound research and understanding on investments and the companies that one’s buys into become important.
Otherwise, we become subject to next milestone from the President – he recently uttered the 10,000th false or misleading statement of his Presidency which translates to ~23 misleading statements or claims a day. The Chinese have become smart enough to tune him off, why are we still paying attention?