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Most investors want to be informed. In fact, you could say it would be completely irresponsible for an investor to not be informed of what is going on in the markets and economy. A good steward of assets should be informed, right? Well, not when it comes to the financial media.
What Does it Inform You Of?
Before tuning in, it is important to know what we are tuning into and deciphering if that information is helpful to our situation. When it comes to the financial media, we know that they are all about getting people to tune in today, and come back tomorrow. The intentional strategy of the financial media is to report on things that occur over the short term. The financial media is not about long-term thinking, it is about short-term clicking. They couldn’t survive without ad dollars in the near term, and to get ad dollars they need eyeballs consistently tuning in.
The media informs investors of the news of the day, the move of the day, and the fear of the day (whether fear of missing out or fear of loss). All of those items have a very short shelf life, and that’s OK to the media because their job is not to help long-term investors. Their job is literally to get people to tune in…their financial livelihood depends on it. So why do long-term investors tune in when the information is not created for them?
We Practice Strategic Ignorance in Many Things
No one wants to be ignorant, but if you put the word ‘strategic’ in front of it and it doesn’t seem that bad. Not only is it not bad, but strategic ignorance is essential in our daily living. And not just when it comes to financial smut and short-term market moves.
People choose to tune into things that support their beliefs and desired outcomes. We pay attention to things that give us pleasure and/or happiness. And we purposely (strategically) don’t pay attention to those things that cause us anger, strong emotion, or anxiety. How many of you have silenced that Facebook friend for 30 days that keeps making political posts? I have!! And it’s not because I agree or don’t agree – it’s that it promotes anxiety and generally strong feelings that are not conducive to me having a good day.
In similar manner, investors can choose to ignore financial news that doesn’t support their goals and objectives. For long-term investors, especially those who have a robust investment plan and/or work with an advisor, it makes sense for them to “snooze” the financial news 365 days/year.
Two Golden Questions
The first question every investor must honestly ask themselves:
How does this information help me and the financial decisions I make?
The answer may be “it doesn’t.” And the more important question for investors to ask is:
How does this information harm me…How might this information cause me to make poor investment decisions.
That second question may have a lot of answers and will be very telling as to how much of the financial media the investor will want to ignore.
Related: Are Financial Advisors Doing What's Right or Just What’s Popular for Clients?