How Financial Media Can Distract and Unanchor Us
The financial media recently has been consumed by the issue of ultra-fast, computer-driven trading and what it might mean for ordinary investors. But arguably what does the most harm to people are their own responses to high-frequency news.
The growth of 24/7 business news channels and, more recently, financial blogs, Twitter feeds and a myriad of social media outlets has left many people feeling overwhelmed by the volume of information coming at them.
The frequent consequence of the constant chatter across mainstream and social media is that investors feel distracted and un-anchored. They drift on tides of opinions and factoids and forecasts that seem to offer no single direction.
The upshot is they end up second guessing themselves and backing away from the resolutions they made in less distracted times – under professional guidance.
Objections by advisers can steer them back on track for a little while, but soon enough, like binge eaters raiding the fridge, they’re quietly turning on News Channels and opening up Twitter to sneak a peek at what’s happening on the markets.
Quitting an ingrained habit is never easy, particularly when asked to go cold turkey. But there are ways of gradually weaning yourself off media noise. And one idea is a “seven-day news diet” that eliminates the distractions a little at a time:
Day 1: Switch off the news – it is like the weather report. It changes every day and there’s not much you can do about it. If you really want drama, colour and movement, stick to Downton Abbey.
Day 2: Avoid Groundhog Day and reprogram the clock radio. Waking up every day to market headlines can be more grating than Sonny and Cher.
Day 3: Read the newspaper backwards. Start with the sports and weather at the back and skip the finance pages. Small talk will be easier, at least.
Day 4: Set up some email filters. Do you really need “breaking live news updates” constantly spamming your inbox?
Day 5: Try “anti-social” media. Facebook is great, but it’s like a fire hose. If you want to be social, pick up the phone and ask someone to lunch.
Day 6: Feeling the pangs of withdrawal? Go to the library and look up some old newspapers. They can give you a sense of perspective.
Day 7: You’re nearly there. Use this window to decide on a long-term financial media diet. You might decide to check the markets once a week, instead of once an hour. The important point is to have a plan.
The Benefits of Switching Off
Those who swear off the financial media, if only for a little while, often find they feel more focused and less distracted. The ephemeral gives way to the consequential and they come away from the hiatus with a greater sense of control. Any changes they make to their investments are then based on their own life circumstances and risk appetites, not on the blitzkrieg of noise coming at them minute to minute via media outlets.
Ultimately, going on a news diet can be about challenging our patterns of consumption and thinking more intently and less reactively about our decisions.
We can still take an interest in the world, of course, but at our own pace and according to our own requirements, not based on the speed of the information coming at us from dozens of gadgets.
A Wealth of Information Creates a Poverty of Attention
In the words of the American political scientist and economist Herbert Simon “a wealth of information creates a poverty of attention”. So it follows that if you economise on your information diet, you can maximise your attention.