Today’s an interesting day. Aside from the big gap opening on the Summers news, the overall market has been flat to weak. And there is “stuff” happening. For example, the NASDAQ 100 (NDX) is down on the day with Apple (AAPL) down about 12 points and offsetting the majority of NDX stocks which are still up. Gold mining stocks are up after having had a sloppy morning, despite silver and gold ETFs being down. The 30 year bond has nose-dived after opening strongly on the Summers news. And more…
Yet is CNBC talking about any of this? Nah. Why?
Because, as I said at my seminar (https://danielturov.com/seminar-cds), “Wisdom bullet” # 26 is ‘Always remember that the media’s sole purpose is to entertain you – and taking them seriously can be injurious to your economic health.’” And so, CNBC is spending all day “entertaining” its viewership with the events at the Washington shipyard, which, while tragic, have NOTHING to do with anything pertaining to the market. But for their viewership (at least in CNBC’s producer’s mind), it’s entertaining.
Bonus: For those who are curious what else I said on the subject of media entertainment at the seminar, here’s the transcript of “Wisdom bullet” # 26:
What’s the number one reason people lose money in the stock market?
That’s a really tough question, because there are so very many different reasons people lose money. It’s such an easy thing to do! But, in my opinion, the number one reason is the media – TV, magazines, and newspapers.
In general, people watch and listen to the financial news media because they believe they will learn something of value. In reality, they watch and listen to the financial news media because (a) it entertains them, and (b) because it gives them the illusion of being part of something important. AND THE MEDIA KNOWS IT.
The media does not get a performance bonus if your investment returns go up. They do not get a bonus if they really teach you so much that you don’t feel a need for them any more. They get a performance bonus (in other words, a larger readership or viewership which, in turn, brings in more advertising revenues) if they keep you entertained enough to stay tuned in. AND THAT’S THEIR ONLY TRUE MOTIVE.
If they can entertain you with Jim Cramer, jumping up and down and imitating the Gong Show, they’ll do it. If they can entertain you with Maria Bartiromo’s charm and personality, then it doesn’t matter to them that she still has little real understanding of what makes markets tick. And if they can run stories about how the big corporations are screwing you, they will. They will do whatever it takes, short of outright lying, to get and keep your viewership or readership! They are the masters of Dan Kennedy’s “purple pill” approach. They’re very good at it.
The insidious problem with the media, and they reason that I consider them the number one reason people lose money in the stock market, is that they make the stock market look so easy. Just watch our show and become a successful investor. Just subscribe to our magazine and you too can play the Wall Street game. Well, as very few people realize – the well-above-average audience here today being a clear-cut exception – is that becoming truly proficient in the stock market is as difficult as becoming truly proficient in engineering or medicine or law or electronics or any other serious profession.
Years ago, living in a suburb of Chicago, I had a very conscientious ophthalmologist. He loved his work and spent much of his free time doing both advanced study and teaching. One day, he asked me my opinion about a certain stock. “Why?” I asked him, somewhat surprised. “Oh, I dabble in the stock market from time to time, and I just read a fascinating magazine article about this company.”
I responded, “What would you think of my doing some eye surgery in my spare time?” He scoffed, with a look that my question deserved. I continued, “My profession is as complex as yours, and I can no more compete with your expertise in my spare time than you can compete with mine in your ‘spare time’. If you want some excitement, go to Las Vegas; you’ll have much better odds. If you want long term capital growth, find a wealth manager with a proven track record and an approach or personality compatible with your own, and let that person manage your money for you. And spend your time helping people with their eye problems.”
Because this topic is so very important, let me stay with it just a moment longer, and I’d like to pose a theoretical question to you: “If you had a choice of blithely believing that your spouse was totally faithful to you or of knowing the truth that he or she was fooling around on you, which would you rather have? The Pollyanna approach would be to say what I don’t know doesn’t hurt me. The analytical approach says it’s going to hurt me eventually either because he/she brings home some disease or because he/she leaves me broken-hearted. Similarly, at some point you’re going to find out the truth about the media and how they’ve sucked you in. Having a Pollyanna approach about how easy the stock market is will cost you every bit of bad as that broken marriage. As much as you’d like to believe that studying the Sunday newspaper’s financial section, reading Money magazine and turning on Cramer on CNBC is going to enable you to compete with people like me, you’re totally fooling yourself every bit as much as if you were ignoring your spouse’s infidelity.
So “Wisdom bullet” # 26 is “Always remember that the media’s sole purpose is to entertain you – and taking them seriously can be injurious to your economic health.”