When people started calling my former employer Sensible Investing TV “the anti-CNBC”, we wore it as a badge of honour. It’s not that CNBC is bad. On the contrary, it’s well produced and presented very professionally. The problem for me is that, other than entertainment, I fail to see any useful purpose that CNBC and channels like it possibly serve.
Don’t get me wrong, business news is interesting and important. It’s part of our everyday lives. If the bank I use receives a massive fine for misleading customers, I want to know about it. Ditto if the firm where my brother or best friend works is closing down or shedding jobs. As a business owner I like to have a feel for the general direction the economy’s heading in. And, yes, I’m interested to learn if there’s a new iPhone coming out. I wish there were more of these sorts of stories on the likes of CNBC.
What I object to is the way these channels set themselves up as a fount of wisdom for investors. They constantly speculate as to which markets, sectors, regions or individual securities are on the way up or down. They speak to “experts” who are little or no better than the rest of us at predicting the future and who, far worse, are often conflicted; in other words they have a vested interest in saying what they do.
I’m sure the journalists who work on these channels would say that they’re helping to inform investors and that, armed with that information, their viewers are able to make better investment decisions. Unfortunately the research shows the very opposite is true, that media coverage exacerbates behavioural biases and ends up boosting the profits of fund houses and brokers at the expense of ordinary investors.
Indeed it’s during times of market turbulence like the one we’re currently experiencing that media coverage is most likely to impact negatively on investor behaviour. Anyone fretting about the markets should try switching over to Sky Sports or Comedy Central for the next few weeks. Better still, take Rick Ferri’s advice and turn off all your electronic devices and read a good book.
I’m currently supporting efforts by the Florida-based author and wealth management consultant Dan Solin to fund a regular financial talk show on public television in the US to counter the unhelpful messages that channels like CNBC put out. If you can support this initiative — financially or otherwise — please do.
In any case, I can highly recommend you read Dan’s two-part blog on this subject for the Huffington Post: