You should be skeptical of the financial media. Tom and Brendan explain why in this week’s podcast. When we refer to the financial media we’re talking about sources like Bloomberg, CNBC, Marketwatch, and the Wall Street Journal. There are plenty of others as well, but you get the point. Many people read, watch, and listen to these sources, and treat the information they obtain as gospel. You really shouldn’t be doing that.
The number one reason to be skeptical of the financial media are their motives. What are the motives of the financial media? Is it to help you pick the best investments and make money or is it to make profit and gain an audience? Financial newspapers need subscribers because subscribers bring advertisers. Financial cable channels need viewers, and once they gain those viewers they want to keep them. Keep in mind that the analysts from these sources are expressing their own opinions. As an investor, you really have no idea what their own bias might be.
So how do these financial media sources keep their audiences hooked? They feature polarizing opinions and make ridiculous claims to get attention. These sensational headlines are meant to evoke an emotional response from the audience. However, if you pay close attention they will never offer direct advice. This is because they have no idea what your financial situation is. Think about it, you are taking financial tips and advice from somebody who doesn’t know you at all. That’s a pretty good reason to be skeptical of the financial media.
The main point that Tom wants to stress to investors is that when reading, listening, or viewing financial news you need to be aware that almost everything has an agenda. So be skeptical of the financial media, read all the sources, and form your own personal opinions!