The communication innovations we have all over us nowadays such as the internet, financial newspapers and special interest tv channels centered on investing like CNBC are a high-speed pipeline of nonsensical chatter. Each one of these sources of information implies that there is no shortage of media people trying to answer our questions with regards to 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 don’t constantly seem like they know exactly what is happening then you will not watch their presentations. If you don’t tune into their show then their ratings decrease. If their ratings drop they get fired and their show gets canceled.
Therefore financial journalists are in the business of discovering great stories and sounding like authorities absolutely. The stock market is an excellent place for them to find out news ‘scoops’ to supply to the public. They don’t really verify their facts very well and sometimes not at all. This means that if some insider desires to feed you a chain of bull manure then all they have to do is keep good connections with financial journalists, sponsor an investment show, or outright buy an investing TV channel such as Jack Welch the CEO of GE did when he established CNBC. What a great approach for inside executives to control the flow of news information to the public than to really own one of the only financial news channels…but not so great for you!
These journalists also kick up the fire by bringing in so-called ‘experts’ to discuss every side of a certain subject that real specialists would not consider essential. This simply makes it even more complicated for the public to comprehend what is important when buying or selling a stock. Shows on CNBC such as ‘Closing Bell’, ‘Kudlow & Company’, and ‘Mad Money’ do nothing at all but confuse and misdirect the focus of most individual investors in the public. Even worse, this means that the financial news media enables overpriced stocks to be recommended through analysts in the inside web that inside executives are dumping on the public because they’re trying to get out. This actually happened at the top of the bull market in 1999. For a great historical description of what took place, read Maggie Mahar’s book entitled “Bull.”
Here is the valuable tip I would like you to think about: when you’re a beginner investor, it’s important that you DO NOT Watch THE Financial News OR READ THE Financial NEWSPAPERS! Don’t let the stock market industry lead you all over by the nose-like livestock to the slaughter house. Do not pay attention to what they want you to listen to. You must focus on learning what is essential 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)