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For most of us Baby Boomers, an iconic memory is Mad magazine’s Alfred E. Neuman, and his hokey, “What, me worry?” We’ve since experienced a thing or two, haven’t we?
There’s nothing wrong with fortifying yourself with realism as you face life’s challenges. But, at least when it comes to our money, evidence is that we’ve jettisoned blissful ignorance to cling to the opposite extreme of hopeless pessimism. Eyeball this chart from financial economist Fritz Meyer, in which the red line depicts consumer confidence and the black line depicts how the S&P 500 Index actually fared during the same timeframe.
Note how groovy we were feeling back in the 60s, and how erratic our red-line path to confidence has been ever since. And yet, despite our perceptions, the market has continued its overall uphill march through those same years. Granted the climb has often included frightening fits and starts. Maybe that’s why it rarely moves in alignment with how we perceive things are coming along.
It would seem the S&P 500 is the quintessential Alfred E. Neuman, not worrying so much, at least compared to us consumers. As with most things in life, a long-term, well-balanced outlook seems the wisest view.
Additional note: The differences between consumer confidence versus the S&P 500 Index are actually even more dramatic than they appear. To keep this chart from toppling over from its own weight, the scales vary for each; the true range between our perception and the market’s reality would be even more extreme were they set to identical scale.