Case Study in Business Journalism

As part of my Year of Business I’ve been reading some business articles.  Often I find that the headlines are incredibly misleading, often close to opposite of accurate.  Take this example:

Read the article, and the source is a Vanguard study which you can read here.  Here’s page one with an abstract:

A more accurate headline would be “A Small Minority of Millennials Are Sitting Out The Bull Market, While Most Of Them Are Doing Exactly What Everybody Else Does” which is kind of interesting.  The truth is well put in a footnote to the article:

Wouldn’t another, perhaps more accurate headline be: “Despite Lessons Of Their Youth, Millennials Follow Traditional Investing Path”?

But consider: we’re only talking about a sample of 4 million Vanguard investors.  So: a self-selected sample of people with 1) money to invest and 2) choosing a conservative investment company!  I would guess the “typical millennial household” has no equity at all?

Buried in the Vanguard study is a story that’s almost more interesting, namely that older generations are taking more investment risk than most advisors would think is wise:

Why this greater-than-expected taste for equity market risk among older investors? It’s worth noting that many current retirees hold traditional pensions, allowing, all other things equal, for more equity risk-taking. Other possible drivers of risk appetite among older investors include concerns over health care costs, low bond yields, and a desire to fund bequests for heirs. And beyond these financial factors are the shared generational experience of investing—both cohorts enjoyed the positive results of the great equity bull market from 1982–2000.

Even the Vanguard study itself contains strange, generational based assumptions:

Who is wiser, the 1/5 of millennials who witnessed 2008 and make the choice to have a “conservative” investment strategy relative to conventional wisdom, or the Baby Boomers who are still operating on 1980s assumptions?

My point here is not to criticize, it’s just to note ongoing observations:

  • headlines can be very misleading
  • when you go to the source of a story, it always gets deeper and more interesting
  • small inaccuracies of language, shorthands, and misleads can compound until we have a distorted picture of reality.  Was this not itself one of the causes of 2008 crisis?


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