Fool.com: Taken In by CNBC [Fribble] April 7, 2000

Fribble Taken In by CNBC

By Larry Kutner (LAK@drkutner.com)
April 7, 2000

I feel like a newcomer to an Alcoholics Anonymous meeting that has a different twist. "Hi. My name is Larry and I've been watching CNBC." ("Hi, Larry!") There's a certain addictive quality to that type of overzealous, often melodramatic financial reporting -- all the more so since I live in Switzerland and see CNBC Europe mixed in with its American-flavored counterpart. The accents change, but the general attitude is the same.

My interest in watching CNBC stems from more than wanting to learn about investing. In fact, I question how much useful information one can actually learn from the channel. By training, I'm a psychologist. However, I've worked as a journalist (TV, radio, newspapers, magazines, Internet) for the past 20 years. That combination of experiences has left me fascinated with the subtle as well as the obvious powers of the media.

The more I watched CNBC, the more I became aware of how well the channel is using its more subtle powers. It's worth taking a Foolish look at that type of influence on our lives.

Although there are some good things about it, the real danger of CNBC is that while we may reject the content of a story as overblown ("The worst point loss on the Nasdaq since...") or misleading ("Investors sold because...."), we slowly and unconsciously come to accept the context of the programming as a whole.

For example, several of the unstated, underlying contextual premises of CNBC are:

  • You should be constantly aware of what's happening in "the market."

  • You should be willing to adjust your portfolio at a moment's notice. Speed is of the essence.

  • You should pay little attention to the tax consequences and commissions involved in stock and bond transactions. They're always less important than stock movement.

  • There are hundreds of middle-aged white guys in suits out there who are willing to share their special knowledge and insights with you freely and without regard to any personal or corporate agendas.

  • By putting these financial experts on camera, we can help them live out their childhood movie star fantasies while giving you the message that they're celebrities. (Can you picture Warren Buffett or Charlie Munger actually agreeing to be a guest co-host of CNBC Squawkbox? Somehow, I don't think so.)

  • No one who's smart ever says, "I don't know what's going on" or "I have no idea what's going to happen."

  • It doesn't matter that very, very few of the charts we use show a zero point on the Y-axis, even though that means that our graphics dramatically exaggerate stock price movement and other economic changes.
Although, as Fools, we may consider ourselves too smart to fall for such claptrap, we should ask ourselves if, for example, we become excited when an analyst says something that supports a recent investment we made. Have we started to pay more attention to daily market gyrations even though we claim to be long-term buy-and-hold investors?

An excellent example of this "content" vs. "context" disparity is "Market Week with Maria Bartiromo," the new CNBC program broadcast early Friday evening. The publicity from CNBC for the program says that it's aimed at medium- to long-term investors (a tacit admission that their other programming is not!) and at the same time describes the content as information that would help such investors decide whether to buy or sell particular stocks in after-hours trading on Friday or wait until Monday morning for the opening bell. Clearly they have an interesting definition of "long-term."

There's no doubt that the content and context of CNBC are driven by advertisers who have a vested interest in those unstated premises. Sure, we may scoff at the ludicrous breathlessness of much of their "reporting." But we must be careful not to be taken in by its more subtle effects while we're focusing on the obvious flaws.

Related Link:
  • Fool on the Hill, 3/16/00: CNBC: Day of Missing Information
  • Fool on the Hill, 3/30/00: CNBC: Taking the Time to Focus