BAD NEWS - WHY THE FINANCIAL NEWS MEDIA CAN COST YOU MONEY!
By Dr. Scott Brown, Ph.D.
The communication innovations we have around us today like the internet, financial newspapers, and special interest television channels focused on investing like CNBC are a high speed pipeline of nonsensical chatter. All these sources of information mean that there is no shortage of media people trying to answer our questions about the stock market and specific stocks. You have to remember that the news media are constantly competing to survive against other stuff you can watch. If they dont always sound like they know exactly what is going on then you wont watch their presentations. If you dont tune into their show then their ratings go down. If their ratings go down they get fired and their show gets cancelled.
This means that financial journalists are in the business of finding great stories and sounding like authorities no matter what. The stock market is a great place for them to dig up news scoops to feed to the public. They dont really check their facts very well and sometimes not at all. This means that if some insider wants to feed you a line of bull manure then all they have to do is maintain good connections with financial journalists, sponsor an investment show, or outright buy an investing TV channel like Jack Welsh the CEO of GE did when he set up CNBC. What a great way for inside executives to control the flow of news information to the public then to actually own one of the only financial news channelsbut not so great for you! These journalists also kick up the fire by bringing in so-called experts to talk about each side of some topic that real experts would not consider important. This just makes it all the more confusing for the public to understand what is important when buying or selling a stock. Shows on CNBC like Closing Bell, Kudlow & Company, and Mad Money do nothing but confuse and misdirect the attention of most individual investors in the public. Even worse this means that the financial news media allows overpriced stocks to be recommended through analysts in the inside web that inside executives are dumping on the public because they are trying to get out. This actually happened at the top of the bull market in 1999. For a great historical description of what happened read Maggie Mahars book entitled Bull.
The famous Yale University Economist, Prof. Bob Shiller, Ph.D. is particularly harsh on the media in his book Irrational Exuberance. Dr. Shiller is one the economists that Alan Greenspan respects most and where he got the term Irrational Exuberance. He portrays the media as sound-bite-driven where superficial opinions are preferred over in-depth analyses. I agree whole heartedly with him and contend that it is also done just because the industry would rather have the retail investor confused and emotionally pliable to get you to buy and sell when they want with total disregard for your best interests!
People who had invested their life savings in the stock market were ripped off in the stock market because the financial news media and analysts were hyping up what a great buy stocks were at the very top of the market in 1999 and 2000. At the same time inside corporate executives were selling out everything they had. What is amazing is that our federal government in the form of the Security Exchange Commission never did a thing about it. There was never a blanket case taken or an outcry that almost all of the inside executives had somehow magically sold out of the market six months before the market crashed.
Here is the valuable tip I want you to consider: when you are a beginner investor it is important that you DO NOT WATCH THE FINANCIAL NEWS OR READ THE FINANCIAL NEWSPAPERS! Dont let the stock market industry lead you around by the nose like livestock to the slaughter house. Dont listen to what they want you to listen to. You should focus on learning what is important in the stock market and the mass media will only confuse you until you have educated yourself. Recommended reading: 1. Mahar, M. Bull! A History of the Boom, 1929-1999 (New York, HarperBusiness , 2003) 2. Shiller, R., Irrational Exhuberance, (New York, Broadway Books, 2000)
I wish you the great abundance in your life you deserve because of what you are and dont forget that happiness is found only in the precious present moment!
About the author:
About the author: Dr. Scott Brown, Ph.D., the Wallet Doctor, is a successful futures trader, real estate investor, and stock investor. Dr. Brown holds a Ph.D. in finance from the University of South Carolina and a Master in International Management from the prestigious American Graduate School of International Business a.k.a. Thunderbird. His 1998 articles in Technical Analysis of Stocks and Commodities were prophetic in predicting an impending stock market crash. He has helped many people become profitable investors by looking out over many years to spot stocks that are low and primed for rise in the new bull market. His second article met with approval by Dr. Bob Shiller of Yale University. Dr. Shiller is the economist that Alan Greenspan most highly regards who coined the term Irrational Exuberance. In 1998 he was shouting out to the world to get out of the stock market but now he is shouting to everyone that it is time to get in! The Wallet Doctor is not only sought after for investment advice and coaching in stock investing but also in futures trading and real estate investing. He also teaches investing in Spanish and Portuguese. For more information visit Dr. Browns site at www.BonanzaBase.comor sign up for his investment tips at www.WalletDoctor.com
