Do you know what financial FUD is and how it can just devastate you? Be sure to watch today’s video as we’ll be digging into this very sensitive topic and more importantly how you can protect yourself. Hey Frank Thomas here from Wealth Generation Strategies and today we’re going to be talking about something called FUD and unfortunately it’s not Elmer FUD. It’s a different type of FUD and specifically financial FUD because yeah I see a lot of it.
So let’s get started here. What is financial FUD? To start FUD is an acronym for the expression fear uncertainty and doubt. Financial FUD is any news that we find that creates fear uncertainty and or doubt within our finances.
Well you may be asking why does it exist in the first place? Well there’s two primary reasons. First is people respond to bad news more readily than good news. Needless to say it causes bad news to skew good news on an average of 17 bad reports to one good report.
So yeah there you go. Second because the first reason it’s been around since the beginning of time. The unfortunate thing I’ve witnessed over time is the increasing impact factor of the FUD being peddled.
To keep FUD effective people seem to level up the FUD on a regular basis. In other words they try very hard to increase the shock factor. Think about it.
Just about every piece of media uses the shock factor in one form or another. Talents like Mr. Beast will use rapid jarring jump cuts, crazy stunts and outrageous scenarios to increase the shock factor in his videos. Now you gotta ask does it work? You bet it does.
Jimmy Donaldson aka Mr. Beast is estimated to earn between 500 million and 700 million a year from his videos. So shock factor works. I currently see many many financial FUD videos coming up on my feed.
Most of the time the news is either really bad or really outrageously good. The latest at the time of recording this video is we’re about to witness the worst financial stock crash in all history. Maybe they’re right and maybe they’re wrong.
What I want to remind you is an event that happened in 1929. It was a great stock market crash of 1929.
By the time the stock market crash ran to its end the markets dropped a whole whopping 89 percent from their heights. This crash was a direct result of market fear uncertainty and doubt. FUD to the rescue.
This stock market crash drove the United States into the Great Depression which lasted for around 10 years. I don’t want to gloss over a lot of details but several lessons came out of this event. Stock markets were criticized for not taking a hold of the situation in a timely manner.
Now stock markets reserve the right now to close trading if they feel the markets are getting too hot. In other words they can suspend trading for short or long periods of time to allow trader emotions to cool a bit. Also it’s not unusual for federal powers to store reserves of cash against negative events.
A good example of this is right now the Canadian Bank of Canada is injecting financial supplementation into the banking industry because of concerns of mortgage defaults that could occur in the near future because of the drastic interest rate increases since 2020. I think it’s important for you to know that the stock market acts like a lunatic on the best of days by the way. One day he’ll try to sell you stocks that are way over value and the next he’ll try to sell you the same stocks way under value.
Lunatic. Absolutely. Overall though if we look at the S&P 500 for the past 100 years from 1924 to 2024 the date the year that this film is being recorded it has increased on average between 10 and 11% yearly even with the stock market crash of 1929.
It’s going to make you think. Also as to the rise and fall of stock prices this is actually the number one reason I invest the way I do. I consider days when the market is down stocks or ETFs and exchange traded funds are on sale so I try to stock up when they are on sale.
Also I look at the dividend value more than I do the price of the commodity. I don’t want to rely on value gain in my retirement to supplement my financial needs. I’d rather invest into quality dividend stocks and ETFs and collect their consistent and reoccurring dividends instead.
For me this is my number one way to overcome the financial FUD I see prophesized every day. It’s easy to get your emotions running when things go in the wrong direction. I remember my wife got pretty upset when I told her that our portfolio fell more than 20% no not too long ago.
I explained to her that this was the worst time to sell. We will then truly realize those losses. I felt that I had invested into good long term performers and a short term dip shouldn’t hurt us in the long run.
My portfolio is still down about 5% but it’s definitely up 15% from that low. But more importantly the dividends have continued to flow. Also you have to remember that criminals will depend on FUD to get you to act where you would normally not act.
Let me give you a great example. I received an email about a year ago from Microsoft that told me someone had compromised my Microsoft accounts and I needed to change my password immediately. Well yes I got caught by it.
I didn’t realize that the email was from a criminal and I do call them criminals on purpose sending me to a very legitimate looking website to change my password. In the meanwhile I had to enter my current password to change it. Hmm talk about a self-fulfilling prophecy.
I reacted way too quickly from fear and did exactly what the criminal wanted me to do. It did involve some work with the help of Microsoft to fix that one but I’m extremely cautious since then. That’s the second lesson that you need to learn in regards to financial FUD.
Don’t believe everything you read see or hear. Unfortunately crime is at an all-time high and there’s a lot of criminals who would gladly empty your wallet into their bank account. Finally don’t get wrapped up in the news that is FUD in general.
I’ve seen many arguments come out of differing opinions from religious political and financial FUD by individuals who have consumed it. Right now both Canada and the United States have very high emotions in regards to their country leaders and possible future leaders. Just recently in the United States there was an assassination attempt on Donald Trump.
The United States is a representative democracy and this means that the government is elected by citizens. Citizens vote for the government officials not men with guns and bullets. It’s very easy though to get caught up in the FUD.
You watch one video on something and then another and then another before long it can become truth to you. You have to learn how to avoid this trap at all costs. I’ve witnessed many acquaintances that have literally lost their objectivity on certain topics because they’ve consumed so much FUD that it’s become fact to them.
Be sure to avoid that trap at all costs. Personally if I find my emotions are starting to get triggered by the media that I’m consuming I step away from it and do a little bit of soul searching. Also I’ll talk to maybe some close trusted friends about it and seek their opinion.
Before long I find that I have a better objective neutral opinion so to speak on the topic and see the truth and fiction of the news that I’ve consumed. Overall what I think I’m trying to say is to avoid financial FUD as much as possible. Stay away from the can’t miss opportunities and trust in long term results of commodities you may wish to invest into.
I’ve lost most of my money from risky investments that didn’t have any kind of track record to truly gauge the performance. So what can you do? Don’t do anything. No! Remember that taking no action carries its own risks.
I sat on the sidelines for one reason or another for over two decades when I knew how to invest, what to invest into and had the means to invest. Time is your number one superpower when it comes to financial investing. With it you can weather financial storms that occur and I promise you that those storms will occur.
With time on your side though you can allow the power of compound interest to be your ally.
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