We have often said that the avalanche of financial information and media leads to further confusion and poor decisions rather than real education or deeper understanding. We are also big fans of college football, and since sports is another area that is blanketed with coverage and commentary, the media parallels are many. So, here is a guide to digesting both sports and financial media, and if you are among those with a mental block regarding finance, just think football.
They have to fill the time – Even finding worthwhile topics for a monthly article is hard enough, but there are multiple sports and financial channels that broad cast all day, every day. Aside from games and daily market developments, there is still plenty of time left to fill. Unless your kid is playing, does anyone really need to watch a high school game on national TV? Just because something is on TV does not give it any greater significance nor does it make it worth your time.
They make a mountain out of a mole hill (and a mole hill out of a pebble) – Every obscure injury, recruiting development and legal infraction involving college and professional athletes is reported and dissected. This goes far beyond the recent high profile rash of domestic violence incidents in the NFL, which is a real problem. Likewise, while a company’s quarterly earnings are of interest to competitors, employees and a small group of analysts who follow that company, for everyone else it is just not relevant.
They abuse the language – While there is plenty of drama and excitement in sports, there are just not that many things that are “unbelievable”, “epic, “legendary” or “iconic”. For some traders, every market move can have substantial financial implications, but for the rest of us, markets don’t really “soar”, “crash”, “plummet” or “collapse” that often. Sports run on passion (“fan” is short for fanatic, after all) while markets run on fear and greed, so the fires must be stoked.
They have a ridiculously short attention span – Whatever happened in the last five minutes draws a disproportionate amount of attention and is analyzed to death until the next thing comes along. Even unsubstantiated rumors can result in team disruptions or quick spikes in markets.
And they like to project far into the future – This is the first year of the four-team college football playoffs and the possible teams have been exhaustively projected every week, even before the playoff rankings began. Of course, every week the actual games reshuffle those projections and the talk is about what happened as well as what might happen next. As the saying goes, that’s why they play the games, so just enjoy the games and let the playoffs work themselves out. In markets, traders will try to gain any advantage they can, but acting on some conjecture is as likely to result in a loss as a gain. The greatest chance at success is to look long-term and let the markets fluctuate as they may.
They repackage the same information – Having eight people comment on the same minor issue adds little value and often as not just ends up being annoying. And sometimes there is no effort to even add a new perspective, just different people saying nearly the exact same thing. In the meantime, what seem like obvious and legitimate questions go unaddressed.
They are as much entertainment as information – There are occasionally successful and worthwhile explanations in terms the average or even uninitiated person can understand and appreciate. For the most part, attempts at being clever or theatric are confusing and seldom funny. Seeing ex-players and coaches re-enact a play is interesting once, but that’s about it. The yelling and props that have bled over from sports to financial reporting are even worse.
The experts aren’t necessarily good commentators – Experts by definition know their stuff, but that same depth of knowledge sometimes gets in the way of communicating clearly. It’s a sports cliché that players at all levels fondly remember their coach’s confused sayings (“line up in a circle by height”) and financial experts are not immune to the same dilemma. Actually, these situations are unintentionally more charming and entertaining than the more explicit attempts noted above.
And the good commentators aren’t necessarily experts – As the saying goes, beware the articulate incompetent. They look as good they sound good, they keep your attention, and when they’re done you’re left with the feeling there was nothing really there. If there was no new information or perspective presented, you’ll know your time was just wasted.
Despite all the shortcomings, there is still plenty of good stuff – In sports, the good stuff is thrilling finishes, exceptional effort or true talent, and memorable displays of the human spirit. The recent story of Lauren Hill, the terminally ill basketball player who only wanted to play in her first, and last, college game is a wonderful example. In financial issues, the good stuff is thoughtfully presented basic information that creates or enhances a solid foundation on which to build a financial approach that fits an individual’s needs and goals. The rest is mostly noise.
Given the various media shortcomings, what is the layman to do? It is certainly okay to simply view media coverage as entertainment, and to gain personal knowledge through other means. It is also helpful to maintain a critical eye and to question what you are being told, especially regarding finances. In the end, making financial decisions based on a media report will provide little consolation when things go bad.