Tuesday, June 22, 2010

Confessions of a CNBC Watcher

I recently concluded my annual bout with a summer cold, which in my old age usually has me quarantined at home for a full week of misery. Last week I had the opportunity to watch a whole lot more CNBC than usual while surrounded by my tissue boxes and bottles of hand sanitizer. Here at the office the analysts in the “Pit” usually rotate from CNBC to Bloomberg, although I can’t tell why they choose one versus the other on any given day. The TV runs in the background and they seem to have developed a finely tuned ability to ignore it for most of the day, and then to pay attention if a specific analyst that we follow comes on or some other relevant news item catches their attention.

If you must know, professional analysts hate to admit to watching CNBC. Most of our independent research makes fun of the network, derisively calling it “bubblevision.” And, truth be told, there is little doubt that the female “on-air” talent is easy to look at, even if they do have Ivy League and Wall Street backgrounds. Like any network, the name of the game is ratings, and CNBC is not immune to serving the needs of their mostly male demographic. The network earned its nick-name “bubblevision” by celebrating record Dow Jones Industrial Average prices on the air, just in time to suck viewers into the excitement of buying right at the market top. If you are looking for in-depth, contrarian analysis of markets, I wouldn’t recommend CNBC as your first step towards market wisdom.

On the other hand, I just read Andrew Ross Sorkin’s book, Too Big To Fail, and in every chapter there is another story of the Secretary of the Treasury, the Director of the Federal Reserve Bank of N.Y., the Chairman of the Federal Reserve, and the heads of the largest investment banks in the country, all riveted to CNBC during the business day. I can vividly remember Charlie Gasparino breaking all kinds of stories about Merrill Lynch, Bear Stearns, Lehman Brothers, and Morgan Stanley during the financial crisis…I just didn’t realize that Hank Paulson was watching at the same time. As addicting as it may be, I firmly believe that watching financial news on TV remains hazardous to your financial health. Now that I’m back in the office I can go back to my usual routine of reading our regular daily research. My message to clients who are addicted to the network...turn it off!