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'Step Away From CNBC' 82

Posted by msmash from the closer-look dept.
Andrew Feinberg, writing for Slate: If you wanted to design a financial channel that would cause investors to underperform the stock market, you'd create CNBC, NBC's financial counterpart that runs on cable news and ostensibly tries to make viewers better investors. You'd make it sober and rational (well, there is Jim Cramer, but we'll get to him later), no need to feature anyone foaming at the mouth about stocks that could triple in six months or worried Cassandras warning that it's time to sell everything and burrow underground. And yet, you'd ensure that viewers stay engaged by keeping them on edge, worried and confused about what might happen next. Anxiety, you'd discover, is your friend, viewer hypervigilance your bread and butter.

In other words, CNBC makes viewers nervous in a very specific way. Nervous that they're about to lose money in a market downturn. Nervous that they might miss a hot trend or stock. Or uncertain that they're in the right sectors. Then an "expert" comes on and says, "Hey, you're in the wrong sectors -- it's time to leave tech for industrials, financials, and health care." In its sober, rational way, the network creates a sense of urgency. Although its tone is never like that of an infomercial, sometimes the message is similar. Act now. The problem is, hypervigilance is probably the worst quality most investors can have. "Sit on your ass," the late Charlie Munger advised investors, emphasizing that when it comes to investing, less is more. Feeling nervous leads to excessive trading. And "all the evidence shows that individual investors do worse the more they trade," says Jay Ritter, professor of finance at the University of Florida's Warrington College of Business. "Buying and selling something based on what you see on CNBC is not likely to be a successful strategy."
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'Step Away From CNBC' More

'Step Away From CNBC'

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  • News for nerds? (Score:4, Insightful)

    by SeaFox ( 739806 ) on Tuesday February 20, 2024 @01:40AM (#64253516)

    Or op-ed pieces with a thinly-veiled agenda against a specific cable network?

    • Re: (Score:3)

      by Revek ( 133289 )
      I had already made the same determination about cnbc. I'm a firm believer in the reverse cramer theory. Its clear they are all hype and no help at all.

      • The inverse Jim Cramer ETF hasn't been doing so well. But it's not been around long,and is being liquidated.

        https://www.marketwatch.com/investing/fund/sjim

    • Ya, I don't get it. I mean, for really good investment advice, especially when preparing for the impending financial apocalypse, people should stick to the gold and Trump NFTs (etc) recommended on the various Fox channels late, late at night. For sure, those will be great for buying things, like food, after the banks collapse ...

      :-)

    • I don't think it's veiled at all. It's a pretty explicit attack on the network.

  • True of all stock pickers (Score:5, Insightful)

    by battingly ( 5065477 ) on Tuesday February 20, 2024 @01:49AM (#64253532)
    I don't know why they're picking on CNBC. You could say the same thing about following the stock picking advice of any expert. That will always be a losing strategy compared to investing in an index fund.

    • Re:True of all stock pickers (Score:5, Informative)

      by bookwormT3 ( 8067412 ) on Tuesday February 20, 2024 @02:08AM (#64253576)

      I don't know why they're picking on CNBC. You could say the same thing about following the stock picking advice of any expert. That will always be a losing strategy compared to investing in an index fund.

      Particularly when the index fund represents the general market, or at least something like S&P 500. I understand that it's impossible to have lost money in any 10 year period of holding the S&P 500, including buying it right before the 1929 crash.

      Of course it also helps to have the courage of Warren Buffet. The courage to sell when everyone else is buying, and buy when everyone else is selling. (although in all truth, it's hardly courage these days for Buffet to roll the dice on a few billion plus or minus on long positions, but anyway...)

      • Re:True of all stock pickers (Score:5, Informative)

        by thegarbz ( 1787294 ) on Tuesday February 20, 2024 @03:58AM (#64253668)

        I understand that it's impossible to have lost money in any 10 year period of holding the S&P 500, including buying it right before the 1929 crash.

        Well that's objectively not true, but your point does stand over really long time frames. E.g. S&P500 was at 1450 points in January 2000, and only 1150 in January 2010. It did go above that point 2 years later thought, 3.5 years if you account for inflation (remember you don't just need to go up, you need to go up faster than monetary value goes down).

        • Just looking at the point value of the index ignores the dividends paid over that period.

          • Re: (Score:2)

            by ulricr ( 2486278 )
            the S&P 500 index only pays 1.5% of dividend a year. Meanwhile, some of us who were invested between 2000-2009 lived through "the lost decade" where our the stock portfolio returned to the same value it was at the beginning. It's only over much longer periods than a decade that you "can't lose money" .

            • That 1.5% compounds over 10 years though. If you are going to compare 10 year returns, you need to include total return, not just look at the index. If you invested 10,000 in January 2010 in VFINX (S&P 500 index fund) and reinvested dividends, you would have had $11,000 in December of 2010. Ignoring dividends, you would have ~$7,000. So you actually would not have lost money over that 10 year period.

              • If you're going to bust out compound math then it's worth doing the actual math. 1.5% compounded over 10 years still leaves you down from your target assuming a linear decline (which it wasn't, it was a sharp initial drop), and 1.5% was eaten by the cost of Inflation over that period.

                • The numbers I cited are backtested portfolio numbers with dividends reinvested or not. Again, it makes the difference between having $11,000 from your original $10,000 investment or $7,000. No, you didn't quite make money adjusted for inflation over that 10-year period, but you didn't lose in nominal terms if you don't ignore the dividends.

      • "The courage to sell when everyone else is buying"

        When everyone is selling someone is buying. Duh!

    • Re: (Score:2)

      by Zocalo ( 252965 )
      Or almost any publication reporting on finance, for that matter. Take a look at the "News" section on Google or Yahoo! finance pages for a few stocks, indexes, or (for a real laugh at the chutzpah of blatently biased reporting) crypto tokens; there's occassionally some interesting stories about the stock/index/whatever you're looking at, but mostly they're full of shitty articles that are almost always trying to push the same buttons as those TFS is accusing CNBC of, or are outright hyperbole that I suspec
    • Did you just really try to claim no experts can outperform the indexes?

      • Did you just really try to claim no experts can outperform the indexes?

        For limited, short durations, yes, some experts can outperform the indexes. Over the long term [businessinsider.com], no [stockanalysis.com].

        • My husband and I have been trading stocks for over 35 years. We have a few million dollars each that cheerfully disagree with you.

          • It's definitely possible but statistically the average Joe can't do it. It also takes a lot more time researching individual companies and following news and reading quarterly reports etc that most people can't or won't do.

            • Yes but they stated experts not average Joe's.

              • You realize the experts don't do better on average than a monkey with darts?

                You can google for this. Every year the monkey comes in about the high-middle of the pack of stock market experts.

                • It seems like you are just lying to yourself to make yourself feel better about using index funds. It's okay you're not an expert that's a perfectly fine strategy but that doesn't mean they don't exist.

                  • Lmao, go google the monkey yourself. I'm sorry you're not in touch with how good "experts" really are.

                    Barring a black swan event, and even through some of those, I'm set for la life of luxury and travel. I'm sure you are, too. Right?

                    So you have some index funds and a few individual stocks. What else are you doing as an "expert"? This'll be good if you actually give a real answer.

                    • It's funny that you think all those professionals that go to work every day managing billions of dollars are losing money. Does Warren Buffet just not exist in your world? You can keep lying to yourself all you want but you aren't going to fool me I've worked in the financial sector I've met highly specialized experts that beat the market. If they didn't they wouldn't have a job. Why do you think trading floors, hedge funds, quant funds etc exist? Why wouldn't investment banks and their clients just b
                    • Where did I say I was one of these experts? I didn't. I just know they exist because I'm not a complete moron like you.

                    • Ok so you don't actually know anything and you're just babbling a bunch of bullshit about experts.

                      Tell me this, genius, if the experts can consistently beat the market then how come they're not all zillionaires?

                      With the extremely rare exception of people like Buffett, 99% of them work day jobs as "experts" for financial institutions and work on salary. And even Buffett has had some really bad years and horribly misjudged things to the tune of billions in losses, although yes I will definitely say he is an

          • Did your trading outperform the S&P or a good index fund after considering the amount of time spent trading, researching, and worrying (billed at $100-$150/hr consulting rates), or was this more of a part time/full time job? Also does your calculation appropriately consider short term gains taxes, commissions (or modern losses to flow/dark pools/high frequency trading), and dividends you may not have received if this was just short term trading? Do you know your average % growth year over year after con
          • Yes and there are lottery winners but I have never won. I guess you have to buy a ticket ... but the fact that someone won does not make it a good bet.

    • I don't know why they're picking on CNBC. You could say the same thing about following the stock picking advice of any expert. That will always be a losing strategy compared to investing in an index fund.

      Not true. Somehow both the advice of Cramer and the inverse Cramer ETF [marketwatch.com] both lose. It takes top talent to give advice that not only loses but betting against it also loses.

    • Jim Cramer. He is a legendarily incompetent economic pundit that famously told everyone their Stearns was a great buy two weeks before the 2008 market crash hit. You could basically do anything and everything he tells you not to do and see pretty good returns. All I can think of is that he's either somebody's brother-in-law or some kind of nepo baby. He does serve the purpose of hyping up stocks that are basically landmines put in place by super Rich Wall Street jerks to suck money from low information inv

      • You could basically do anything and everything he tells you not to do and see pretty good returns.

        Somehow this isn’t true. The Inverse Cramer ETF [marketwatch.com] also loses money. It takes extreme talent to not only give consistent bad advice, but betting against it also loses.

        • Re: (Score:2)

          by hawk ( 1151 )

          nah, it just takes the higher costs of holding short positions.

          which doesn't change the fact that Cramer is just two big shoes, a red nose, and a squirt flower from being a clown . . .

    • I don't know why they're picking on CNBC. You could say the same thing about following the stock picking advice of any expert.

      ""Fugayzi, fugazi. It's a whazy. It's a woozie. It's fairy dust." - Mark Hanna, the Wolf of Wall Street

    • Re:True of all stock pickers (Score:4, Insightful)

      by Mspangler ( 770054 ) on Tuesday February 20, 2024 @10:16AM (#64254394)

      Not just stock pickers, all news is that way. Whip up fear to sell something. Stocks, bonds, gold, mRNA, Wegovy, "ask your doctor about (insert chemical here)", GMO, climate change, lightning detected 20 miles away, etc, etc.

      Oh, yes then they run news items about "everyone is stressed" and profess complete puzzlement.

    • True of media in general, and social media even moreso.

      I used to spend a lot of time on slate, but it got too hyperbolic (and left-leaning). Or maybe it always was and I just got sick of it.

      When a news outlet constantly creates expectations - that catastrophe is about to fall upon some person or group or company - and that keeps not happening, that means that news source is making you less informed.

    • CNBC is the largest mainstream stock hype channel. This concludes the investigation.

  • Propaganda (Score:4, Interesting)

    by quintessencesluglord ( 652360 ) on Tuesday February 20, 2024 @01:55AM (#64253544)

    Isn't it pretty well established by now most financial news (hell, maybe most news) is thinly veiled propaganda, little more than an infomercial (have you seen Jim Cramer)?

    It's not that they prey on fears, but they have the air of authority (remember the con in conman is for confidence) in their pronouncements, regardless of how contradictory they are (you're just not sophisticated enough to understand). If it were really about the economy, they'd be calling out how much of a house of cards it all is, but it is THE house of cards that controls the world.

    Just hope you don't have to cash out your 401k during a downturn.

    • I thought his first name was "Cosmo"?

    • Just hope you don't have to cash out your 401k during a downturn.

      If you are remotely close to relying on your retirement savings, and you still have those savings in volatile investment instruments instead of moving to safer and more stable instruments such as treasury bills and money market instruments, you're just doing it wrong and are working against advice from literally every financial planner that actually works for clients.

      The closer you are to retirement, the more risk-proof your retirement should be.

  • Stop calling them News! (Score:5, Insightful)

    by kiviQr ( 3443687 ) on Tuesday February 20, 2024 @02:07AM (#64253574)
    Call them what they are: Entertainment - they are trying to evoke specific emotions to keep you engaged and they have own agenda. This is not News.

    • Re: (Score:2)

      by tlhIngan ( 30335 )

      CNBC wasn't either. It was a soapbox for which a certain (ex) CEO of GE used to spout his wisdom on how a company should be run.

      You would attribute the words "maximize shareholder value" to which his claim to fame was bring GE stock to ever soaring values.

      (Of course, "maximize shareholder value" is a misnomer, and it happened during Henry Ford's era because shareholders wanted money, while Ford wanted to keep prices load and wages high. This was not because of any form of worker benefits, but actually a rut

      • Auto worker turnover was about 400% at the time Henry Ford doubled wages.

        Training costs were brutal, and being paid, on average, four times a year per job.

        At double the wage ($10/day instead of $5), ford was suddenly paying *less* per unit of work than his competitors.

    • Re: (Score:2)

      by Monoman ( 8745 )

      They are doing the same thing as the "news" channels. Focusing on emotional reactions that cause viewers to stay tuned. They actually create viewers that think they are informed but their viewers actions indicate otherwise.

  • And people think cryptocurrency is a scam? (Score:1)

    by Anonymous Coward

    If these morons knew how to make money in the markets they wouldn't be doing what they do considering they could make infinitely more working the markets. No one would EVER sell something that wins in the markets. They would use it themselves to become the richest people in the world.

    Markets are all the same. There is gambling, cheating, and people making money selling bullshit about the markets.

    • Not sure how this got modded up -- you guys are getting lazy. Crypto is tied to NOTHING, owns NOTHING, pays NOTHING, and creates no value. It's purely speculative -- you're just banking that it will magically be worth more than you paid for it at some point and won't be the last guy holding the bag when the music ends, just like the tulip bulbs of olde.

      Profitable (that's the important word) publicly traded companies literally make a profit (that's the profitable part), often own assets both tangible and o

  • And many will use FUD and FOMO as tools to do so. Do not trust them. whether CNBC or smaller scammers.

  • Nervous that they might miss ...

    Staring at a screen all day causes FoMO: News at 11. Well, it's not the screen, it's the idea that information/video displayed is more important than putting the phone down.

  • The goal is not to inform or explore, but to create a false context in the mind of the viewer that can be "farmed" for future attention. From an objective, journalistic viewpoint, what news organizations today do is wildly irrelevant. They don't devote attention proportional to importance, but simply proportional to its commercial value. In the case of CNBC, they get paid a lot by companies who benefit from volatility.
  • Basically just targets normal people to make them fuck up and cause them to lose money. The four worst things you can do for your portfolio are 1) need to use the money you invest 2) sell at a loss 3) listen to jim cramer (this should actually be tied for #1 because he consistently predicts the exact opposite of what happens - the inverse jim cramer index was at like 5-6 digit multiplication gains last I saw it) 4) invest a dime in the current hyper-inflationary environment with exponentially-accruing inte

  • But It is just in reverse, listen to Jim Cramer, then do the opposite. And if he talks enthusiastically about a company, run.... just.. RUN!

  • you'd ensure that viewers stay engaged by keeping them on edge, worried and confused about what might happen next. Anxiety, you'd discover, is your friend, viewer hypervigilance your bread and butter..

    The exact same could be said of Fox News, or Alex Jones, or Rush Limbaugh. They don't deal in information, exactly, or [snort] journalism. They peddle fear. (Librals! Fauci! Trans! Immigrants! Invasion! Urban Chaos! Books!) And then spoonfeed the audience crap that's supposed to assuage the fear. (Trump!

  • "Although its tone is never like that of an infomercial"
    I only ever see it sitting in faceless hotels waiting for my waffle to cook before a wearily resign myself to reviewing the couple of hundred work emails that have accumulated over the last night, but CNBC 100% resembles an infomercial in both tone and substance.

  • A corollary is that both Jim Cramer of CNBC and Larry Kudlow of FBN are well known for being nearly always wrong in their recommendations and predictions. I don't know if this is due to faulty data or bad analysis or even a negative feedback loop with gullible viewers.

  • now do Fox

  • Motley Fool has turned this way as well - calmly saying things that imply you should take some immediate action and then contradicting them just a few days later (and on other parts of their own site) as if the earlier post never happened. On a post say, for one example, Disney's great, they'll have a PAID link with a headline that implies otherwise.

    and then 3 days later, totally flip flop. The public headline/story is Disney's not doing well, but there's the link to the PAID whitepaper headline implying Di

  • The investors I know all get their news and data from websites - some subscription-only and some that plus invite-only.

    Anything *NBC is downstream of Project Mockingbird. It's not for your benefit. Often outright lies.

    I wonder what their real share is - nobody I know watches such things.

    Some of these things exist so other media can report "CNBC reported that..." - look up Nancy Pelosi explaining the Wraparound Smear.

    That has real backend value.

  • I think everybody here from the old crew is now old enough to have learned at least fundamentals of investing and saving money for old age.

    But for the new folks here, and/that jumping into these weird stories about finance and a technical website. Look at the information below for a good starting point when it comes to learning about finance and creating your own investment plan for your own investments and for retirement .

    I've been sticking to this ideology for half of my career and in the beginning I was

  • CNBC - the station that claims that you can't afford to retire unless you have at least $1.5M in savings. Given that the *median* income for a family in the US is $70k/yr, exactly how are the people who make that, or less, supposed to have those savings?

    AND STFU about what they should have invested, they were spending their *net* on housing (what, is it now about 1/3 of income?), bills, food, and maybe even their kids.

  • Investing in the stock market is the same as buying a lottery ticket with one very important difference. The odds of winning are with you. As many have pointed out, the values of stock overall have increased over time as long as the country's businesses overall have continued to prosper. But, as Japan has shown, that history is not guaranteed to continue forever. The argument about whether you can put your thumb on the scale by being smarter investors is kind of silly. Obviously statistically the average i

    • Investing in the stock market is the same as buying a lottery ticket with one very important difference. The odds of winning are with you. As many have pointed out, the values of stock overall have increased over time as long as the country's businesses overall have continued to prosper. But, as Japan has shown, that history is not guaranteed to continue forever.

      The argument about whether you can put your thumb on the scale by being smarter investors is kind of silly. Obviously statistically the average i

      • Re: (Score:2)

        by hawk ( 1151 )

        > Imagine if you could buy additional social security
        >credit instead of investing in the stock market.
        >Imagine if small employers could simply pay
        >additional social security for their employees
        >instead a paying the costs of 401(k) plans.

        That research has already been done.

        Social security returns a benefit of about 25% of that which would have been received by investing the same amounts at the same time.

  • If you're just trading hoping for the stock price to suddenly jump up, that's just gambling, unless you happen to have insider information, which is illegal. People who make lots of money in the stock market over the long term start by having in-depth understanding of the industry they're investing in, so they understand the intricate details of what makes a company in that industry profitable. Then they spend a lot of time researching companies in that industry and going out and visiting them to see whic

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