Tuesday, April 8, 2008

CNBC Feels Your Pain

The latest issue of Fortune features an article about CNBC and how they report business news. This piece unintentionally represents many of the things that I dislike about business journalism. It really shows the superficial, unsophisticated, sideline style reporting that produces noise that is of little use to investors. As the author notes without a touch of irony, CNBC is i"investotainment."

Network boss Mark Hoffman distills the formula down to this:

'We're always looking for qualitative combat on the air. Most of these conversations live somewhere between fear on one end and greed on the other. One person wants to unload something, and another person wants to pick it up.'

Does that sound like measured or useful information? Or is that tabloid journalism worthy of the New York Post?

CNBC, in it's attempt to provide news that is "fast, accurate, actionable, unbiased" ultimately fails. If you are committed to the first of those tenets, then it's awful hard to execute the other three. Susan Krakower, who produces Fast Money, made her bones in reality TV and trashy talk shows.

There's nothing wrong with watching the channel; just lower your expectations. Don't expect analysis any better than, "the market hates uncertainty," or "there was a lot of profit-taking today." Also, don't expect it to make you a better investor. If a stock recommendation is being touted on CNBC, it's probably too late to buy it. You'd be better served by focusing on a few companies and their industries, learning them inside out. That's how you get an edge.

This is not to say that Fox Business News or Bloomberg TV are any better. CNBC just happens to be the biggest kid on the block so I'm taking aim at them.

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