Looking for hot trades? Do you get your tips from CNBC's Fast Money crew? Is Mad Money's wild man Jim Cramer your trading guru? And speaking of trades, did you know that earlier this year, CNBC's Maria Bartiromo, aka the "Money Honey," actually filed to trademark her nickname?
The airwaves are awash with real-time coverage of the markets. I could spend my entire waking life toggling between CNBC, Bloomberg, and now Fox Business News. If I'm watching Squawk on the Street but need to run to the store, no problem! I can catch the broadcast on XM Radio. Off to the gym? Every treadmill at my fitness center has a personal LCD TV attached. I can pace myself to streaming live quotes from the New York Stock Exchange.
The program formats for these business channels feature the same basic routines. They alternate between interviews with fund managers -- "What are you buying in this market?" -- and showdowns between financial pundits on hot topics -- "Are we heading for a recession? Is it time to nibble on financials? Will we get a January rally?"
The phrase "financial porn" was coined in 1998 by Jane Bryant Quinn, the Newsweek contributing editor for personal finance. Almost a decade later, my Google search scored more than 1,500 hits on the phrase. It even has an Investopedia entry, which carries an explicit warning: "Short-term focus by the media on a financial topic can create excitement that does little to help investors make smart, long-term financial decisions, and in many cases clouds investors' decision-making ability."
Monkey see, monkey do
Trading in Apple
Actually, the trading mania is worse than that. Since long-term investors own some unspecified number of shares, this example significantly understates the issue. Yes, there are still some smart Apple investors with a buy-and-hold strategy, and they were rewarded with a 136% gain over the past 12 months. I wonder how many trigger-happy day traders came anywhere near that return.
During the same 12 months, Radian Group
In contrast, ExxonMobil
Stock |
Annual Turnovers |
Market Days |
Total Gain or (Loss) |
---|---|---|---|
Radian Group |
7.9 |
32 |
(78.2%) |
Apple |
5.0 |
50 |
135.5% |
Akamai Technologies |
4.0 |
63 |
(33.5%) |
Sirius Satellite |
3.4 |
73 |
(13.6%) |
Rambus |
3.4 |
72 |
11.6% |
|
2.9 |
87 |
52.6% |
ExxonMobil |
1.1 |
226 |
26.0% |
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Fool contributor Doug Short (TMFDoug) does not own shares of any company mentioned. Akamai is a Motley Fool Rule Breakers recommendation. The Motley Fool has a strict disclosure policy.