I come from a family where tasty lunch was served over a TV playing the daily news louder than we can talk. Sometimes my father used to change the programme if the news stories were too shocking or inappropriate for our age.
But I really remember growing up listening and watching the news while eating. This was a family habit for years, it still is. But my younger-self didn’t really like that habit. My present-self dislikes it even more.
That is because I realised watching the news is a bad habit that adds very little to my everyday life. Sometimes, it can even deduct value – it can be a negative thing.
Why?
If you follow any TV news programme for a while you’re starting to see patterns. First of all, the news focuses on stories that grab our attention and sell views and clicks. That’s not surprising. TV channels are organisations that need to sell ads and make money.
The more views they get the higher the ad sales and the final revenue.
So the first pattern you’ll notice is that news will inflate the stories to make them more attractive than they really are. “London house prices CRASH! The capital is falling faster than the rest of the country in X years”. If you dig into the data, you’ll find that a 5% drop is nothing compared to the recent gains.
But you already know all that. Let’s talk about the 2nd pattern.
The second pattern and most important is that you will find that the “new”s usually report whatever is “new”. After all, this is where the word comes from 🙂
So you will find that recent news stories do not really affect your everyday life. Even worse – you cannot do anything about it to improve your life. It is outside your circle of control. In other words, although you may curse on the guy who killed more than 100 people without regret, THERE’S NOTHING YOU CAN DO ABOUT IT!
But Michael, do you suggest I disconnect myself from the world? This is madness.
No there should be a balance. Of course, there are stories worth reading about but you should be the one who finds out more about a specific topic. Then you can go to a trusted source and learn more about it. Otherwise, I feel like I am being spoon-fed whatever the news have available today.
My choices are Guardian digest (once a week) and the Economist. I may have a few other sources that I forget.
The other thing that bothers me about watching the news is the behavioural aspect of our human nature. We, humans, draw patterns based on what we observe. The more we observe the more we enforce our belief of what’s right or wrong.
To explain, if you followed the recent very sad Grenfell tragedy closely, you most probably heard there was a fire which burned the building taking many people down with it. A scary story indeed which almost made me cry watching it. But for days you may have also heard numerous stories about the victims and their relatives on first pages.
Being very emotionally attached to the story, and watching how the news presented it, I’ve heard people saying they want to avoid living in a tall building. But the chance of this event happening again is much smaller than dying from health problems because they take the tube every day to work. So do I, 4 days a week! Shame!
This deeply rooted personal view is called anchoring and is quite dangerous to our long-term thinking.
Watching the news can be harmful to you because you may take action based on emotions rather than logic. This is how the news programme is designed around. I’m not saying do not follow what happened. Read the story, mourn and contribute to charity for the unlucky people and their families. But search for it and be selective. Do not watch the news.
You can become a better human by reading books instead. The reason I love books is that they’re timeless. You can read the same book 10 years after it was published and I’m sure you will get the most out of it (read my favourite book list here). Books are not news and are not old either!
Same goes for financial news. Oh, don’t get me started on financial news…!
Working at a bank allows me to always have a look on the various TVs they have in all rooms. Usually, the selected channels broadcast financial news – CNBC, BBC News, Bloomberg TV etc. “Biggest fall in the quarter, Dow Jones falling for more than 400 points today!”. 400 points may sound like a lot if you are living in the 80s, where DIJA was around 2000. But today? That’s a -1.6% fall which can happen for ANY reason.
That’s called volatility and I will not be surprised if I see another 400 points upwards in the next few days.
The unfortunate impact of following the financial news (unless you are a professional trader) is to be a victim of your own behavioural biases.
In other words, fear and sell when you should be buying instead of sticking to your dollar-cost averaging approach. Even worse, you may change your asset allocation according to fear or greed in the market. “Biggest tech boom in years” may convince you to allocate all your savings to a tech ETF.
Changing your asset allocation according to positive news is a dangerous proposition. If you want to learn more about Amazon, Apple, Google and the likes, don’t watch the news. Read Stratetchery instead.
And that’s about all. If I ever watch the news again, it will inevitably be because I’m having lunch in Rhodes with my dad. Worth it! 😉