Wednesday, October 28, 2009

Investing And Entertainment Do Not Mix

Investing done right is quite boring for the average consumer. With the human emotions of greed and fear driving much of investor behavior, it should come as no surprise that investors fall victim to Ponzi schemes that they know, in their hearts, sound too good to be true, but go for it anyway. These range from Hedge Funds to Variable Annuities to TV “Pitchmen.”
Of course, that is not how it looks on TV: Jim Cramer yelling and Maria Bartiromo on the floor of the exchange for the closing bell. Why that's exciting stuff! Suze Orman as well.
CNBC + Investing = Action Sport.
Danger Will Robinson, Danger!
At the top of the tech bubble, investing became America's favorite spectator sport. Everywhere you went, CNBC was playing. I still think that there's something odd about sitting in your dentist's office watching CNBC, but back then you couldn't escape it.
It seemed to die down a bit as volatility dropped from 2004 to mid 2007.
Then it was back. Round-the-clock coverage of the "Financial Crisis" and insightful commentary from Jim Cramer. I have never been surprised that people watch Cramer. His show can be entertaining, but I can't believe that people act on what he says. It's like taking knife handling advice from a circus clown.
Investing lesson:
Take the time you used to spend watching “financial entertainment” and do something worthwhile or simply fun. Never, I mean never, ever, confuse “financial entertainment” for professional advice.

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