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The Financial Media is Lying to You

A few examples from this week:

  • “Dow sheds 486 points” <– lie
  • “Blackstone posts loss, shares slide” <— lie
  • “S&P 500 Estimates slashed after third-quarter misses” <— lie

Are the facts wrong? No, of course not. CNN, The Guardian, and Bloomberg wouldn’t have published the articles unless the facts had been checked.

Then why are those statements lies?

Yesterday I wrote about the hidden (and often misleading) messages that we’re bombarded with via advertisements in the financial industry. The same thing goes on in the financial media itself. It’s not exclusive to the ads.

In each of those cases above, the lie is the unspoken statement that accompanies the headline: “…And this is relevant to you as an investor.”

They can’t actually put it in writing. If they did, it would be easy to question it. After all, how many people own (or were thinking about buying) shares of Blackstone? And how many of us long-term investors really care what the Dow did on any one given day? Instead, they publish articles with the knowledge that we’ll see them and assume that they’re important. They wouldn’t be in the newspaper if they weren’t important, right? 😉

And you can’t really blame them. If the media published only the truly important information, it would get rather repetitive. For example, imagine what the financial portion of the evening news would look like if it was always framed in terms of how relevant it really is to the average investor. I’m guessing it would go something like this:

“Market is up [or down] today. But that probably doesn’t matter to anybody’s long-term plans. Most of us are, after all, looking at a multiple-decade time frame. Let’s all just remember to spend less than we earn, diversify our investments, refrain from panicking when the market is down, and take advantage of our employers’ 401k match programs.”

That would sum up just about everything that’s truly important about investing, wouldn’t it? But after a few nights of the same thing over and over, everybody would stop watching.

Instead, we get sensationalized headlines and a nation full (nationful?) of people convinced of the importance of today’s financial news. Personally, I do my best to stay Oblivious to stock market news. I’d suggest you try and do the same. 🙂

It’s a bit disheartening to know that we can’t really rely on the media to teach us the truth about investing. Some of us (myself included) are lucky enough to have parents who taught us about money when we were young. Sadly, not everybody is so fortunate. If only our education system actually taught kids about personal finance…

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Comments

  1. Mike,

    Another great article! This is exactly why we shouldn’t listen to the financial media. Their goal is to sell papers, magazines, or get people watching their shows. Like you said, it would be really boring if they actually talked about the things that are truly important to long-term investors.

  2. This article is right on the money. I tip’d this for you so others will hopefully notice and read.

    And btw, it’s “nation full”.

  3. Thanks for the kind words, guys. And thanks for tipping the article. Always appreciate that!

    And, yeah, I know it’s actually “nation full.” But for some reason the idea of the word “nationful” was just amusing to me. (My apologies for dorky word humor.)

  4. There is a lot of money to be made by having millions of people (or a nationful) that never learn about personal finance, yet they have money in their pocket to put in ill advised “investments”.

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