Cnbc
Despite the ongoing bull market, financial television channel CNBC had one of its worst years in 2014, according to Nielsen. The financial blog Zero Hedge, relying on Nielsen data, reported that Squawk Box, Power Lunch, and Mad Money all had their worst year ever among the much-coveted 25-54 demographic. And the terrible year is part of a longer-term decline in viewers for the once-popular cable channel.

So how do we explain CNBC's ongoing demise in a year when the S&P 500 delivered double-digit returns?

The Fed-phobic Zero Hedge implies that retail investors have given up on the channel that has "devolved into endless cheerleading of failed policies and rigged markets." Other observers feel CNBC has become too entertainment-focused and not serious enough. Others counter that it's actually not entertaining enough.

Personally, I don't have a clue why ordinary investors are watching less. I do know, however, that tuning out CNBC and similar financial channels is very good for your portfolio. Research presented in Daniel Kahneman's Thinking, Fast and Slow shows that following financial news on a minute-by-minute (or even day-by-day) basis can result in poor investing performance.

Read a book and then take a nap
Kahneman's findings are simple to grasp. He discovered that the pain of frequent small losses is much greater than the pleasure of equally frequent small gains. When investors use a narrow frame – a process where one makes decisions without considering the context of the entire portfolio – then a sequence of small losses might lead to hasty, bad decisions. A better approach would be to ignore the daily losses and gains, while using a broad frame – a process where decisions are related to the overall portfolio. Kahneman writes:

The combination of loss aversion and narrow framing is a costly curse. Individual investors can avoid that curse, achieving the emotional benefits of broad framing while also saving time and agony, by reducing the frequency with which they check how well their investments are doing. Closely following daily fluctuations is a losing proposition, because the pain of frequent small losses exceeds the pleasure of the equally frequent small gains. Once a quarter is enough, and may be more than enough for individual investors.

Given that "following daily fluctuations is a losing proposition," you can see why it's a very good thing that fewer people are watching the minute-by-minute updates on stocks, commodities, interest rates, and other topics on CNBC.

A tendency for financial media to dwell on bad news can also have particularly negative consequences for ordinary investors, according to Kahneman. He notes that the typical response to bad news in general is increased loss aversion, which can result in poor decisions for your portfolio over the long term. Tuning out all the negativity will make you "less prone to useless churning of your portfolio." A commitment to holding on to your positions, regardless of the breathless commentary in the financial media, will improve your investing performance, according to Kahneman.

Smart is as smart does
So maybe the reason investors are tuning out CNBC is that they are becoming smarter. Anyone who wanted to follow Kahneman's advice surely wouldn't want to expose their fragile temperaments to the frenetic coverage of financial television.

There was also additional evidence from 2014 that retail investors might be getting smarter. Using data through November 2014, The Wall Street Journal reported that investors poured $244 billion into low-fee, passively managed funds, while pulling $12.7 billion from higher-fee, active funds.

In a year when 74% of active, U.S. funds underperformed their benchmark, retail investors decided to buy low-fee index funds and tune out CNBC. Those seem like very wise decisions to me, though I admit it probably wouldn't make for a very interesting story on financial television.

John Reeves has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.