You’ve been watching financial porn again haven’t you? I can always tell. I don’t even have to check your TV for the last channel viewed or dig to the bottom of your trash bin. Don’t bother deleting your browser history either. I already know. I can tell by the way you act; by the questions you ask and the things you say when we’re together. Things like “Is my portfolio beating the S&P 500?” or “Should I be buying gold?” or “This looks like a good time to load up on defensive stocks.”

Listen to me – I want you to stop. Don’t do it for me. Don’t even do it for us. Do it for you. Because that stuff will rot your brain and you won’t even realize it. You might love it and think that you need it, but it doesn’t love you. It doesn’t need you. Okay, it doesn’t need you specifically. It needs enough people like you to keep it on the air–more on that in a moment–but it’s not helping you the way it says it is. In fact, it will steal your dream of being financially independent and it won’t even apologize for it. And when you finally wise up one day, it will just move onto the next unsuspecting victim who doesn’t know what I am about to tell you about financial porn.

  1. It’s a Fantasy. The financial porn industry is a business. It would be great if their business was to provide accurate news and information you could use to make financial decisions, but it is not. Their business is to attract as many people to watch and read as possible, so they can sell advertising and make money. One thing they have learned is when it comes to finances people like good news. They watch and read more if the news is about making money. They want to believe they are learning how to become rich or richer. People don’t like to think about losing money. And even worse – they don’t like to be bored. If what they are viewing is making them feel sad or bored they change the channel or surf to another website. That’s bad for the financial porn business. So they report all the good news they can find and they dress it up to be fun and exciting. They sweep much of the bad news under the rug. They screen guests for optimism and enthusiasm. They put a positive spin on events to keep you happy. Because happy people watch. You are not being informed, you are being influenced. You are being sold the fantasy that your path to riches goes through them. And it’s a dirty lie.
  2. It’s Tactical, but not Timely. An efficient market is one in which all the news about the goods or services being bought and sold is factored into the price. If a market is 100% efficient, then there are no bargains to be found. As soon as a bargain appeared it would disappear because everyone would immediately recognize the mispricing. I don’t believe securities markets are 100% efficient, but they are certainly more efficient than the publicly available financial news/porn channels. In other words, I believe highly skilled investors like Warren Buffet may be able to find bargains in the securities markets, but they will not find them by watching the mainstream financial porn channels. By the time the financial porn channels deliver the information, it is already baked into the price. They give you information of a tactical nature, but you get it far too late to matter.
  3. It Influences Your Behavior (whether you realize it or not). Now that you know the financial news channels are spinning (not reporting) and the information they provide is useless in making tactical trading decisions it’s safe to watch, right? What’s the harm in watching… you know, just for the entertainment value?
  • In short, plenty, due to this wonderful trick our brains play on us called anchoring. Anchoring works like this – things you are exposed to (especially numbers) will influence how you think about unrelated topics. In his book Predictably Irrational, Dr. Dan Ariely demonstrated the anchoring effect with an experiment. He had the students in his class write down the last two digits of their social security numbers. Then he held up a cordless trackball and asked the students to estimate how much they would pay for it. Now, there is ZERO relationship between your social security number and the value of a cordless trackball, yet students with social security numbers ending between 00 and 19 said they would pay, on average, $9 for the cordless trackball while students whose social security numbers ended between 80 and 99 would have paid, on average, $26 for the same trackball. Just having a higher number in their head led them to pay 289% more for the same item!
  • So even though you just watch financial porn for amusement, your brain will become unwittingly anchored to the information to which it is exposed. You will start to wonder about things like “Is my portfolio beating the S&P 500?” or “Is it time to get some gold?” or “We must be getting close to a downturn in stock prices.” Things that ultimately distract most people from their actual financial goals. You might think you are just watching for fun, but you are still being negatively influenced. You are still being led astray.

Don’t be ashamed if you have succumbed to the allure of financial porn. We’ve all been there. It is enticing, tantalizing, and available for free 24/7. Happy, wealthy people talking about how you can also become happy and wealthy. What’s not to love about that? You can get drawn in like a moth to a flame.

Giving it up will ultimately yield better results. The best remedy is to quit cold turkey. Decide you’re not going to indulge in it any longer and stick to it. Maybe even read something helpful. We can recommend some great books by Nick Murray, John Bogle, Thomas Stanley and John Danko, and many others to help you get your mind cleaned up from that steady diet of hogwash and decadence you’ve been giving it. It will improve our relationship, too. Instead of me reeling you back in from your misinformed fantasies the next time we’re together, we can spend our time formulating your SMART (Specific, Measurable, Achievable, Relevant, Time bound) financial goals and discussing how you’re going to proactively meet them. That’s the work we financial planners are best at and love doing. But don’t do it for me. Do it for you. You might even discover that your reality is better than your fantasies.