Deaths Per 100 Million Miles Traveled: Planes vs. Cars
Plane Crashes Attract Attention Because They Are Rare
Though the circumstances surrounding Malaysia Airlines flight MH370 are not yet know, the potential crash has attracted massive media attention. This sort of front page coverage is typical just about any time a passenger plane goes down. The sensationalist coverage can easily lead you to believe that air travel is dangerous, and can prompt fear of flying. However, it’s precisely because plane crashes are, fortunately, so rare that they attract such exceptionally high media coverage. If the media covered car crashes in the same way they covered plane crashes, there would never be time to take about anything else. For example, last year in the US roughly 34,000 people died in car crashes, that’s enough people to fill Madison Square Garden twice. On the other hand, there haven’t been more than 12 major plane crashes in a year since 1960. It’s far more important to wear a seat belt in your car, than to worry about air travel.
Perception Of Stock Market Market Crashes Is Similar
Perception of investing can be similarly skewed by the media. Images of stressed traders are shared around the world whenever the market declines by a worrying amount. However, focusing on these bad days overlooks the fact that over the long term stocks have historically been a great asset class to invest in. Stocks have returned about 6% a year according to long-term research by Jeremy Siegel. Nonetheless, the media tends to report the bad days, which are newsworthy rather than the steady, slow and predictable upward march of stocks. So as long as you have a long-term time horizon, such as being in your 30s and investing for retirement in your 60s, stocks can be a great place to put your money within a diversified portfolio. However, just like plane crashes, the media tend to focus their attention on rare and memorable events which can give you a skewed perception of reality whether you’re about to get on a plane or make an investment decision.
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