Watch Out For The Media
Sometimes people ask me, “What should I watch out for when it comes to preparing for retirement?” I think they usually expect me to tell them about a specific stock to avoid or something like that. But my answer is far different. You see, one of the biggest things to watch out for is actually the financial media.
If you turn on the TV, listen to the radio, or open certain publications, you’ll quickly find yourself barraged by a torrent of financial advice—advice that’s often contradictory. “Buy!” “Sell!” “Hold!” the media proclaims. “Bull markets!” “Bear markets! China! Europe!” Your average NFL referee doesn’t have to endure as much yelling.
Why do I recommend people ignore all this noise? Because listening to it can be pretty risky, for the following reasons:
1. Which noise are you going to listen to?
As I said before, a lot of the advice you hear in the media is contradictory. Some pundits say one thing on Monday, then the opposite on Tuesday! So if you do pay attention to the financial media, who will you listen to? You can’t follow them all—there’s not enough time in the day for that. You can’t do everything they say, either, because that would violate the laws of physics. After all, you can’t walk left and right at the same time. There’s never any consensus in the financial media, and trying to find it won’t bring you answers. It’ll bring confusion.
2. The “advice” the media gives isn’t specific to you.
Imagine if there was a “health” media. Imagine turning on the TV and listening to someone say, “Every American should take insulin!” or “You should forget about Band-Aids® and use dried seaweed bandages instead!” Would you listen to them? Of course not. You’d never pay attention to a doctor who tried to prescribe medication without knowing anything about you; your lifestyle, your history, or your physical condition. That would be disastrous. So why pay attention to some financial “expert” who doesn’t know anything about your finances, your goals, or your appetite for risk?
If the two of us ever met on the street, and you asked me “How should I invest my retirement savings?” I’d never dream of giving you advice until we first had the chance to sit down and examine your financial situation. It’s just common sense.
3. A financial pundit’s job isn’t to educate—it’s to attract an audience.
Make no mistake; the media plays a crucial role in our society. Without the media, we’d have no way of knowing what’s going on in the world beyond our own front yard. We’d have no access to what happens on Capitol Hill or on Wall Street. And there are certainly brilliant members of the media whose work is intelligent, diligent, and honest.
But the media contains more than just reporters and journalists. It contains pundits. A pundit’s job isn’t to report, but to editorialize; to give their opinion, and to make their opinion profitable. (After all, the “media” is really just a collection of corporations trying to make money. There’s nothing wrong with that, but it’s important to remember it.) To make their opinion profitable, pundits have to attract an audience. The best way to attract an audience is to be as loud, entertaining, and sensational as possible. But “loud, entertaining, and sensational” shouldn’t ever be confused with “knowledgeable, educational, and thoughtful.”
It can be fun to listen to these pundits, but never rely on them. There are too many stories of people blowing their retirement savings on a “hot stock” tip, or missing a fantastic change to grow their savings because pundits were too busy counseling fear. Instead, rely more on your own common sense. Educate yourself. Speak or work with professionals that show a personal interest in you. Use planning instead of punditry as a guide to achieving retirement success.
And as you plan for your retirement, remember: watch out for the media!