Ray’s Take Programs offering insider investment tips and advice on financial strategy abound on television. You might occasionally learn a valuable nugget to apply to your own unique financial needs, but a study by Case Western Reserve University showed that investors who followed televised recommendations actually lost money over the six months following.
There are several reasons why television is not a wise source for investment advice. First of all, the primary goal for these programs is to attract the biggest possible audience in order to sell advertising. Those so-called financial experts are there for entertainment value at least as much as investment smarts. They will never be accountable to you for your results.
Secondly, the sheer volume of tips and advice televised financial shows have to offer up day after day leads to a lot of conflicting information. What is right and what is wrong? Neither the on-camera talking heads nor the unseen producers really care, they just want to keep their programs lively to build audiences. If they get lucky and get it right, it’s an opportunity to tout their success. If they get it wrong – there’s always the next program ahead.
Finally – and most importantly – a lot of the information shared revolves around predictions on how certain stocks or industries will perform in the short term – even in the next week. Making investments based on hot topics and predictions like these can wind up costing the average investor dearly. You could easily fall into the trap of buying at the highest price and, later, selling at a loss based on a “tip.” Worse yet, you are wasting valuable time and energy on distractions rather than focusing on a long-term sustainable financial plan.
If you just want to be entertained, stay tuned in. However, if you want thoughtful advice about your investments, turn off the noise, or go to an independent professional financial adviser who will focus on your best financial interest instead of higher ratings.
Dana’s Take Why limit turning off the television to programs about money and investing? The more your television is turned off, the more you can actively engage your body and mind instead of sitting there being passively entertained.
Books, games, conversations and walks are all excellent alternatives to vegging out in front of the flat screen. You might be surprised to find that less television can actually improve your mood and sense of wellbeing.
Consider television news: By incorporating dramatic music and powerful graphics, news broadcasts are designed to increase your anxiety level. To keep you tuned in and ratings high, television newscasters use their larger-than-life personalities to present news in the most sensational light possible.
Turning to newspapers and the Internet for your news instead of TV can significantly dial down the drama yet keep you just as informed. Just making this one change could have a positive impact on your outlook, and that’s certainly not a bad thing.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at firstname.lastname@example.org.