John Bogle, the founder of Vanguard Funds, has a piece of advice for investors: “Don’t be captivated by the siren song of the market.” Here’s a tip we’d add: turn off CNBC.1
Watching too much CNBC (and other financial news networks) can lead to information overload and result in short-term thinking and reactionary investment decisions, neither of which helps investors succeed over the long-term. As Bogle puts it, “impulse is your enemy.”1
With a nearly 24-hour financial news cycle, it’s easy to get caught up in latest trends and excitement of the market, but often what you see on CNBC is little more than dramatized financial reporting designed to invoke emotion.
We think you can be a better investor by simply turning it off. Here are 5 reasons why.
5 Reasons to Watch Less Financial News Channels Like CNBC
1) Can Increase Emotion and Anxiety, Leading to Impulsive Decisions
Watching too much financial news can lead to investment decisions based on emotional stories, which might go against your long-term investment plan. Any given day on CNBC brings with it forecasts for doom on one hand and the “next hottest investment” on the other. “Gold will soar!” “Stocks are heading lower!” We think the stories are mostly sensationalized to keep viewers coming back, but there is danger in that.
2) Financial News Is Not Related to Your Personal Financial Situation
Reporters on TV do not know your financial objectives, or anything about your investment portfolio. But one of the most important tenets of investing is to build a portfolio based on your long-term goals, factoring in things like your retirement income needs and estate planning wishes. CNBC speculates on the short-term, but your investment plan is for the long-term. Which is more important?
3) Let Your Financial Advisor Do the Worrying
If you are hiring a financial advisor to build and manage an investment plan for you, let them shoulder the burden of watching the markets and caring for your portfolio. You should, however, be able to use your financial advisor as a sounding board if you ever see or hear anything in the news that concerns you. Talk it over with them before making any investment changes.
4) Big Name Pundits on TV and the News Can Be Wrong
Studies show that the best market gurus are right only about two-thirds of the time, and most get it right only half of the time. Recent examples underscore this point. In 2013, bond-fund “king” Bill Gross of Pimco boosted his Treasury holdings by 40%, just before the big bond sell-off that summer. Meredith Whitney, one of only a handful to forecast the recent mortgage crisis, went on 60 Minutes claiming that there was about to be a massive state and municipality default on debt. It didn’t happen.2
5) Reduce Stress and Free Up Time for More Important Things
Stress isn’t good for your overall health, and watching financial news can often cause it. Not watching financial news also frees up time to spend on meaningful retirement activities, like traveling, enjoying retirement and being with your family.
Use One of Our Wealth Managers as a Sounding Board
Call one of our Wealth Managers at 1-800-541-7774 if you’d like to discuss a news story that concerns you. We can also discuss our outlook on the markets, share with you the money manager strategies we’re currently recommending, and check to see how your portfolio is positioned for the future. If you’d prefer to start the conversation over email, please send a note to Wealth@wrapmanager.com.
Michael is a Certified Wealth Strategist and Wealth Manager at WrapManager, Inc.
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