Should I Listen to Commentators on Financial News Programs?

Should I Listen to Commentators on Financial News Programs?

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.

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