For many, the alluring world of financial news programs represents a gateway to seemingly exclusive insights about the ebbs and flows of global markets. These programs are hosted by sharp-looking, smooth-talking commentators, who wield a barrage of statistics that make the complexities of the financial world seem simple. The question, however, is whether we should be listening to these financial news commentators or not.

The Attraction of Financial Media

Financial news shows, in essence, are broadcast productions designed to attract and retain viewership. Their success hinges on their ratings, which directly correlate with their ad revenues. Therefore, everything these commentators say or do is inevitably structured to engage viewers and bolster these ratings.

The commentators are undoubtedly charismatic, camera-friendly figures, armed with articulate advice that seems so straightforward and effortless. But one needs to discern that being camera-friendly is not a guarantee of sound financial advice.

The Illusion of 'Easy Money'

These commentators often pitch their financial insights in a way that makes earning money seem almost effortless. If their advice about buying shares of a certain company (let's say XYZ) was indeed a 'no-brainer', then these shares would have been bought up by everyone already, and they would not remain advantageously priced.

It begs the question, why would a host disclose a lucrative tip to everyone else rather than keeping it to himself and amassing a fortune? The answer could lie in the need to disseminate tips as part of their job, or perhaps there's nothing particularly unique about the advice itself. Their primary aim is not to ensure your financial success, but to maintain the show’s ad revenues.

The Danger of Overreliance

Relying heavily on financial news commentators for investment advice has its dangers. The key caveat to consider is that ‘smart money’ often uses news and other mediums to artificially inflate security prices, while they may be trading contrary to what they advocate.

While this is not an accusation, it does emphasize the need for viewers to conduct their own research. It is crucial not to allow financial media to do all your thinking for you. Engaging with financial news should always involve a healthy dose of skepticism.

The Myth of Predictability

The ability to predict financial events with certainty is a myth. If it were as clear-cut as financial commentators often suggest, most of us would be millionaires and could retire by 40. The financial world is filled with uncertainties and complexities that no amount of smooth-talking can simplify.

While financial news programs provide useful insights and updates on market trends, it is essential to remember their primary purpose: to increase their ratings and ad revenues. Their advice should not be taken as the ultimate guide but rather as a springboard for your own research and analysis.

Always approach financial advice on these platforms with discernment and a healthy dose of skepticism. There's no such thing as 'easy money,' and what appears to be a straightforward investment strategy on screen may not be as simple or profitable in reality. The world of finance is complex, and understanding it requires more than just tuning into a news program. Do your due diligence, and remember, smart investing involves critical thinking, patience, and discipline.

Summary

It’s easy to become drawn in by the financial media, but it’s important not to let them do your thinking for you.

Commentators on the most reputable financial channels will always be sharp-looking, smooth-talking, and quoting a barrage of statistics that makes it seem like you didn’t know anything before you tuned in.

Is this an indication of being camera-friendly? Without a doubt.

Is it an indication of sound financial advice? Absolutely not.

Usually, financial commentators articulate their “advice” in a way that makes it sound obvious and easy, but as we know, there’s really no such thing as easy money. If buying shares of XYZ were really such a no-brainer, everyone would already have bought these shares and they would no longer be advantageously priced.

What would have made the host report that tip to everyone else instead of keeping it to himself and making a fortune? One could say it’s because it’s his job to give people tips, and he has to report some of them.

Or, it could be that there’s nothing particularly special about the advice, and he is just blowing everything out of proportion to keep the ratings up. After all, he is not making money when you make money – he is making money on the ad revenues of the show.

First and foremost, everything they say and do is designed to keep the show’s ratings up. It’s wise to remember that. The other caveat is that the smart money has a documented history of inflating security prices artificially through news and other means, while quietly trading in a contrary fashion.

Of course, we’re not pointing fingers or making accusations, we’re merely emphasizing that it’s important to do your own research and to indulge in the financial media with a grain of salt.

It’s extremely difficult to foresee events in the financial world; if it were as obvious as the commentators made it sound, we would all be millionaires and retired at 40.

Should I Trust the Opinions Expressed by Various Financial Analysts?
Should I Rely on Analyst Upgrades or Downgrades of the Positions in my Investment Portfolio?