Jeffrey Pavlik
August 02, 2017
Jeffrey Pavlik @ Pavlik Capital Management LLC
Managing member Pavlik Capital Management LLC

“No offense, but you are stupid.” - Commentary June, 2017

  

   In the movie Anchorman 2 Ron Burgundy (Will Ferrell) is having breakfast with a pitchman trying to sign Ron to his wild news channel idea. “We’re starting a 24 hour new channel, the first of its kind, GNN.” Burgundy laughs uncontrollably, “That is without a doubt the dumbest thing I’ve ever heard. You mean news going 24 hours around the clock? A channel that’s never off in other words?” Pitchman says, “Yeah, yeah.” Ron laughs and says, “No offense, but you are stupid.”

   Yep, that was the first thing that came to mind after a discussion with my 13 year-old son a few weekends ago. It occurred while having the second of two free breakfasts at our hotel during a weekend away. To the delight of 50% of the guests CNN was on the television. To the anger of 50% of the guests CNN was on the television. The sound was turned off so only the headlines were changing along with commentators yapping. After a second day Max looked at the television, turned to me, and asked, “Is this on all day?” I said, “Yep.” He asked again, “All day?” To which I then told him that it was the reason we didn’t watch the news at home. I told him if he turned on Fox News right now they would likely have a headline about the same story that would be preferential to the other party with commentators enforcing those views based on the same facts as CNN. 

   I grew up in the Burgundy era so when this happened I couldn’t help but compare how different things are today. Then there were 8 channels on television, not 550. The news was local and at 10pm…period. After Ron accepted the job he says, “I’m going to do what God put Ron Burgundy on this earth to do. Have salon quality hair and read the news.” That was how it worked. The news was 30 minutes long and stories were reported without commentary because time was limited. The only supplements for information and entertainment we had were Sports Illustrated, The Chicago Tribune, book stores, record stores and radio stations. Looking back the only thing any of us disagreed about was the Cubs versus the Sox; to which I still feel horribly sorry for any of my Cub fan friends….regardless of their fluke win last year. 

   Whether the facts are presented truthfully or commentators are vetted for validity doesn’t matter. Google any topic, sort through 550 television channels or YouTube: look long enough and you will find a view that confirms yours and you’ll feel vindicated. An entire industry based on a preconceived conscious filter of the world to match a like-minded defined segment of subscribers or watchers.

   Albert Einstein understood it well, “Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are even incapable of forming such opinions.” We debated a quote here about a-holes and orgasms but that would have been very CNN or FOX News as we would have clearly been sensationalizing a simple thing such as an opinion quote. Anyway, I couldn’t get the interaction out of my head; how a 13 year-old saw the lunacy in the 24-7 opinionated presentation of some fact…if indeed a fact actually existed under the biased clip, commentator and headline…FOX or CNN. Yep, the pundits’ and writers’ livelihoods depend on it; so embellish away.

   Will Trump’s revamp of healthcare, simplification and lowering of taxes, and repatriation of cash from businesses overseas be pro-business? What channel are you watching? Will his perpetual stream of subconscious tweets cause riots and war? What channel are you watching? Will de-regulation cause the sky to turn purple and the Cubs to win the World Series again? What channel are you watching? Trump has been in office for six months, has passed virtually nothing of historical significance and yet the S&P 500 is up nearly 20% and over 12% YTD. Take a look at the charts to the side. One depicts the number of times the VIX has closed below 10 (pink cells). Note the 17 occurrences this year totaling 65% of all times since 1990! Look at the other chart and the lack of major index pullbacks globally this year. Virtually none. That said, turn on a news channel or read/listen to the news online and you may as well cue up “It’s the End of The World as We Know It” by REM on Spotify. 

   Is the neutered government and incessant bickering/blaming/pathetic governance by both sides as reported 24/7 causing the general population to dig in on their confirmation bias side and check out of the markets? Not sure, but clearly something has changed.  Today, of the 28 pages in The Wall Street Journal six pages had to do with finance, markets and investing. What?!?! CNBC (a business channel) covered every White House press conference today. The business media knows zero market volatility equals zero ratings and zero readers. Their solutions: work the confirmation bias and report on the things that matter to bored investors: politics and FANG stocks. Enjoy! The biggest challenge we have today is filtering out all the noise and not conforming to the confirmation bias in any way. Given the lack of volatility and complacency in the markets and plethora of divisive media outlets everywhere we suggest the same. Stay hedged. 

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