- Almost all financial media is bad.
- Their job is to distract us.
- If you care about your money you’ll turn off the TV.
Monitor your media diet.
Are you going to wake up on Monday morning at 6 am and put down three cheeseburgers and fries with an ice cream sundae?
No, of course not.
That would be ridiculous.
Well, waking up and turning on the noise box to watch basic cable and to drown yourself in distraction does the similar damage.
Am I reaching? Maybe.
Maybe I am being a little harsh.
Let’s dig in a little.
How I Learned
Everything I know about trading options I learned from Sean McLaughlin.
Sean and I have travelled together all around the world over many years, to India and Japan and elsewhere.
And he’s taught me a lot about life beyond options.
This week, Sean wrote about how he’s adjusted his media diet throughout his career
“I stopped watching financial news during the 2008 crash. The yelling, the fear, the urgency – it messed with my head, and my trades.
“Now I turn it off. Not because I don’t care. But because I do.
“I trade better when I’m not triggered.”
It took me longer than Sean to come to this realization.
For me to finally understand the damage that consuming basic cable news, financial or otherwise, does to investors, I had to see it myself.
Once I was behind the scenes as a guest on all the financial networks, it quickly became obvious what the problem was…
And still is.
The folks who run financial news networks – “news” networks in general – have different objectives than traders and investors.
We’re only here to try to make money from the market.
Their job is literally to distract us from trying to make money.
They want our attention so they can sell ad space to sponsors pitching stuff like men’s hair-loss pills and life insurance policies.
We have completely different – and conflicting – objectives.
Now, I want to make one thing clear: This doesn’t make them bad people.
In fact, it’s quite the opposite.
Living in New York City and doing the media circuit for so many years, my encounters were almost always amazing – smart, happy, intelligent people.
That’s not the problem. That was actually the most compelling part of these experiences, the great people.
They’re just playing a completely different game.
They’re not managing portfolios. They don’t have to answer to limited partners. They’re not dealing with household assets.
They’re only job is to convince you to keep coming back – and to keep consuming.
They want to make you feel like you’re falling behind if you miss out, that you’re not informed.
As it turns out, of course, people who consume this stuff are the most misinformed.
Counterpoint
Someone said to Sean, “It’s not a bad signal to fade ‘Markets in Turmoil’ segments.”
And, yes, that is true.
If you bought stocks every time CNBC hosted a “Markets in Turmoil” special, you would have a 100% win rate, with average one-year forward returns of 40%.
Here are the stats from Charlie Bilello from Creative Planning showing all the data from 2010-22:
When the TV people are so scared they have to run a whole special about it, we want to buy with both hands.
But is that a reason to watch basic cable?
Of course not.
They announce these specials ahead of time, and you can get that information on Twitter in real time
You can still act on it without having to consume any of the content.
“But isn’t using social media such as Twitter/X just as bad as watching CNBC, JC?”
Well, yes, but…
There is one important difference.
You can easily curate a valuable social media stream based on your objectives.
On basic cable they do the curating for you – based on their objectives.
We control the stream on Twitter. And Twitter is all you need.
Make sure to follow me @JC_ParetsX.
Stay sharp,
JC Parets
Founder, TrendLabs