Three Ways the Financial Media Deceives You

August 5th, 2020
August 5, 2020
Joseph Vecchio

Crossed out Financial Media News outlet on a Television screen.

Watching financial news on CNBC or Fox Business can whip anyone into a frenzy. The loudmouthed hosts, alarming headlines, and fear over missing out on a “hot stock” can make even the most disciplined investor anxious.

However, it’s crucial to know that these outlets are primarily motivated by selling advertisements and luring in consumers. They offer useful information at times, but once you begin paying for their content, your long-term financial goals are of little concern to them.

Having worked on Wall Street for over two decades, I know how irrelevant these outlets are when the real professionals formulate their winning investment strategies.

Let’s identify the financial media’s shortcomings so we can become better-informed investors.

1) It’s Hard to Beat the Market When You’re Competing Against Machines

According to CME Group Inc., at least 70% of trading activity on U.S stock exchanges are done by automated trading systems. These programmed “algos” not only cause wide price swings, but they time their entries and exits more precisely than your average person. Casual investors often lose money attempting to outmaneuver these expertly designed systems.

Robot wins math competition against human.
Don’t try to beat a robot in speed mathematics.

The extent to which automated systems dominate the market is rarely if ever mentioned in the press.

2) Consumers Are Often Drowned in Useless Information

On any given day, we’re inundated with a barrage of “breaking news” segments, ill-informed takes, and surface-level stories by the financial media. Because these outlets rely on being entertaining to drive viewership, they have little incentive to follow up on stories that do not rile up consumers. They can spend one day covering a certain company, only to never mention them again.

The most successful investors extensively research companies and/or ETF’s before deciding to invest. They also factor in larger macroeconomic and historical trends. This sort of thorough analysis is hard to encapsulate in clickbaity articles or 30 second soundbites.

3) You’re The One Who Bears The Consequences of Taking Their Advice

Let’s say you take a stock tip from your favorite Bloomberg TV host and make some money in the short-term. Initially, things will seem great……until you begin to wonder how long you should hold the stock. Or if you could make more money elsewhere. Or if you should ignore the negative press your chosen company is now getting or take it seriously.

Mainstream financial outlets are clueless about your unique financial goals or how to tailor a long-term savings plan specifically for you. If you’re serious about creating a prosperous future for yourself, you’re better off working with a financial planner, one who has your best interest at heart and is experienced in navigating the ever-changing tax and economic landscape.

Two people are growing investments and are unsure when to sell.
Have a plan with your investments and know when to cut your losses.

As the founder of Shore Financial Planning, I don’t push faulty investment products onto my clients just to make commission sales (a common practice in the industry). I implement proven, effective strategies to reduce your annual tax liability and ensure your savings accounts are secure and robust.

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