When asked what to watch out for when it comes to investing, clients may expect us to tell them about a specific stock to avoid, or something similar. But our answer is often far different. One of the biggest things you may want to watch out for is actually the financial media.
If you turn on the TV, listen to the radio, or open certain publications, you’ll quickly find yourself barraged by a torrent of financial advice – advice that is often contradictory.
Tuning Out the Noise from the Financial Media
While it is important to keep informed, you should also be wary of much of the noise from the financial media for the following reasons:
1. Too much contradictory information
Financial “experts” may often say one thing on one day, and then reverse course and say another thing on another day. Keeping track of everything they say can be exhausting. It is impossible to listen to them all. After all, you can’t walk left and right at the same time because it defies the laws of physics. Without any consensus in the financial media, the contradictory advice and information just adds to the confusion.
2. Short-term emphasis
If you’ve ever watched a financial media channel, the first thing you may have noticed is the ticker at the bottom of the screen. There are constant updates of the Dow, S&P 500 and NASDAQ on a daily basis. Because of this constant stream of information, you can get lulled into thinking only about the present. While it may be interesting to see what a stock or sector might be doing, if you’re prone to panic over market ups and downs, then you may lose sight of your long-term investment strategy.
3. The “advice” is not customized
Would you ever take the advice of a doctor on TV who did not know anything about you, your body weight, your lifestyle or your family medical history? You probably wouldn’t listen to that advice. So why would you listen unquestioningly to a financial “expert” who doesn’t know anything about your finances, your appetite for risk, or your long-term financial goals? If we ever met on the street and you asked us where to put your money, we would not dream of giving you advice until we first had the chance to sit down and examine your financial situation – it’s just common sense.
4. Financial media is there to attract an audience.
Make no mistake, financial media plays a crucial role in our society by delivering up-to-the minute information on Wall Street, the latest developments with businesses across the globe and covering what our government is doing. The media, however, contains more than just intelligent and diligent reporters – it also contains pundits whose opinions and reporting are subject to bias. In order to make their opinions profitable for their parent corporations, pundits have to gather an audience in order to attract advertisers. Some may do this is by being loud, entertaining and sensational to keep your attention for as long as possible. It may be fun to listen to them and what they have to say, but you might not want to rely on them for insight. There are too many stories of people losing all of their retirement savings on a “hot stock” tip, or missing a fantastic market rally because pundits were too busy counseling fear.
Instead of spending time listening to all the “experts” in financial media, you may want to educate yourself and work with a financial advisor that has a personal interest in you and your economic well-being in order to achieve financial success.
This material was prepared using third party resources, and does not necessarily represent the current views of The Goff Financial Group which are subject to change without notice. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering tax or legal advice. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as financial, investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This document is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.