Media narratives are almost always wrong

A useful heuristic I have found is that media narratives are almost always wrong. Whenever there seems to be a consensus by the media, that “such and such will happen” or that “such and such is certain,” such certainty almost falls way short of reality.

For example:

Student loan and college bubble bursting. College tuition costs and student loan debt keeps growing despite the insistence by the media that it’s a bubble and unsustainable. The media has been wrong about this for almost a decade now. Maybe they need to just admit that expensive tuition is the ‘new normal’. The days of paying for college with a part-time job are over.

Housing market crash. It’s been a decade since the housing market bottomed despite the media insisting that a crash is around the corner and prices are too high and unsustainable. Maybe they are sustainable and the media is wrong. They were, admittedly, right in 2005-2007 but that was after being wrong, again, for the preceding 15 years.

Tech and web 2.0 crash. Same as above. Pundits have been predicting a Web 2.0 crash and Silicon Valley tech crash for a long time and keep being wrong.

Stock market crash and recession. Same as above. The post-2009 bull market and economic expansion has defied all predictions by the media, as well as financial pundits, of its denouement.

Trump winning causing a recession and financial crisis. Yup, looking at you Paul KrugmanM, although many conservative pundits (the so-called never-Trumpers) predicted the same, including Kevin Williamson and Ross Douthat. I have respect for Mr. Williamson and Mr. Douthat and think they impart valuable, interesting social commentary, but their inimical dislike of Trump gets tiresome at times and leads to being wrong more often than not. Instead, the S&P 500 has gained about 33% since Trump’s win, and the US economy has posted over 2 years of strong GDP growth and falling unemployment.

Brexit causing a financial crisis. After the S&P 500 initially fell 5% on the night of the vote, it quickly recovered and made new highs and in retrospect was a good buying opportunity. There haven’t been any negative economic consequences that can be attributed Brexit thus far, in part because, three years since the vote, it hasn’t even happened yet.

Relapse of 2008 banking crisis. Given the severity of suddenness of the crisis, it only seemed logical to assume that there would be a relapse. Never came to be.

Double-dip recession. Same as above.

Trump is too soft on dictators. The evidence suggests otherwise. Trump is forcing countries with un-democratic or autocratic leaderships such as Russia, China, North Korea, Turkey, Iran, etc. to play ball or face economic consequences such as sanctions and tariffs.

WMDs in Iraq. And oldie but still important. Even the NYTs suffered reputational damage for promoting the war (Judith Miller contorversy).

Trump impeachment. I remember in early 2017 when some betting parlors were offering as high as 1-1 odds of impeachment within Trump’s first two years.

Trump collusion with Russia. Related to above, there was a consensus by many, including some conservatives, that Trump colluded.

Trump causing another ‘world war’, Trump hurting diplomatic ties with allies, Trump provoking civil unrest. Contrary to a common narrative in 2016-2017, foreign leaders respect Trump and want to work with him. Most recently, Mexico compromised with Trump to improve border security in exchange for Trump relinquishing the tariffs, although the veracity of this is disputed. Relations with allies remain amicable. Trump’s recent visit to the UK went swimmingly. Besides the occasional campus skirmish or North Korea missile test, there is less global and civil unrest than ever before, or at least in a long time. These protests and marches, such as the 2017 and 2018 Women’s Marches, get a lot of attention but tend to be peaceful and uneventful, and ironically make more headlines for in-fighting for supposed lack of diversity than any unrest engendered against Trump supporters.

Campus rape epidemic. This is more of a left-wing media narrative, but like above, proved false.

Trump tariffs hurting the US economy and stock market. Here is a screenshot of tariff-related headlines taken from the past few weeks after Trump imposed tariffs on Mexico and additional tariffs on China:

If the stock market is a real-time gauge of economic sentiment, then market participants are not concerned given that the S&P 500 has rallied for six consecutive trading days and is up 5%. The predictions in early 2018 that Trump’s first round of tariffs would cause inflation and hurt the US economy proved false, so Wallstreet and fund managers and traders are not going to make the mistake of heeding these experts again. In retrospect, the trade war is mostly media hype.

Finally Uber. Although this may be premature given that the IPO was only a month ago, it seems as though the media was wrong again, and Uber is now trading above its IPO price. The media narrative for the past 5 years has been that Uber is losing tons of money and is doomed due to regulation, competitors, and scandals, yet Uber is still worth over $60 billion. Yes, Uber is losing lots of money, but they said the same about Tesla for the past decade, yet Tesla is still around and its stock is 1,000% higher than it was in 2010 after it went public. And same for Amazon and Netflix, which were/are losing money yet have been great investments. Similar to Tesla, Uber has plenty of ways to raise money such as through secondary offerings and issuing debt, and Uber’s expenses are temporary as it builds its network.The media keeps insisting that because Uber is losing money (it reported an operating loss of $3 billion in 2018 after losing more than $4 billion the previous year) it should be close to worthless, yet given that it’s worth so much, obviously, market participants are not too concerned and there is more than meets the eye here. The media thinks they know more than the market. Yes, in 1999-2000 many money-losing internet businesses failed, but the media does not make the subtle distinction between a business being cash-flow positive and losing money on one-time expenses, versus a business having stagnant growth and losing money due to the actual business model being unprofitable. My take is, the uber-fication of the world is happening. Uber cars and self-driving Teslas will be ubiquitous in a decade.