Don’t Watch Financial Shows
For some reason, Americans tend to think if something is on TV or in print, that it’s more likely to be true than if it comes out of somebody’s mouth or is on the internet. This statement is actually probably true, however there is still a number of things which end up on the television that are some really bad information. As much as we would like to be able to trust that comes out on our favorite news and information shows, but sometimes they mess up. This is particularly true for news shows, specifically financial news shows which are often seen on CNBC and Fox News on Saturday mornings. This also goes for financial news in print, often times, there are mistakes.
Quite often we hear the same stories over and over again, such as “The Best Stocks You Should Own This Year”, and “How will ____ effect the economy?.” It really gets boring hearing the same thing over and over again. They continually cover the latest financial news of how will this event effect this company, which doesn’t matter but to 1% of viewers who actually invested in that company. They never get down to basics and explain how to handle your investments, such as what type of retirement account to use, how to get started investing, and the like. Instead people have to stumble through the process and try to decipher what the talking heads on television are talking about.
These shows often have the tendency to have guests on and ask them which stock is going to go way up or way down. Most of the time these decisions are very uninformed and based on a few minutes of research before the person goes on the show. They make it appear as if they have done all sorts of research and are a professional who knows the stock will go up. One show that is particularly guilty of this sin is Mad Money with Jim Cramer. Recently he told viewers that Apple Computer was the buy of the century only for the stock to drop ten dollars (13%) in the following two weeks. There have also been news stories that his stock picks are just as effective as picking stocks at random. If anyone actually gets their financial advice shows from cable news, that person is probably not going to be making a lot of money in the stock market. Smart investors take the time to do their own research and make what they think will be wise investments.
Finally, you have to listen to every thing through a filter. A lot of local “financial” shows are run by local investment and real estate companies who are trying to sell their products. Be very wary of these shows in every occasion. There are some really high quality financial shows such as The Dave Ramsey Show, and The Clark Howard Show, but they are the exception rather than the rule. You have to ask why is this person telling me the advice they are giving me? Is it because they would profit from it, or are they genuinely trying to help me? Do your research before accepting any financial advice from anyone!