Watching financial TV can make you poorer
Dan Kadlec of Money looks at financial news on television in the wake of the publication of Clash of the Financial Pundits, written by former CNBC personality Jeff Macke and current contributor Joshua M. Brown.
Kadlec writes, “I’ve had my own brushes with TV punditry and seen firsthand how bookers, under pressure to get a warm body on camera, often don’t understand the topic to be discussed. They just want someone out there who will have an opinion and be entertaining. Once a booker asked me to go on air and talk about CEO pay. I had spent a week researching the subject and written a column about it. I was ready. On air, the host introduced the topic as Wall Street pay—which is a very different subject. I had almost nothing to contribute and was never invited back.
“Macke and Brown explore this theme throughout and conclude that a successful pundit’s key attribute is the willingness to speak confidently on any topic, whether or not they understand it. Writing about Granville, whose ‘early warning’ calls moved the market in the 1980s, they note that what he ‘had lacked in breadth and depth, he made up for with sheer personality and moxie. He had figured out the secret to all punditry, market or otherwise: certitude.’
“The question underlying all of this is simple: Should you believe any financial forecaster and adjust your investments accordingly? The authors say no. They cite a 2005 study that looked at 27,000 forecasts by hundreds of experts over 15 years and concluded, ‘The experts’ forecasts were no more accurate than those of dart-throwing chimpanzees.'”
Read more here.