I took a few brief looks at the new Fox Business Channel and was still waiting for the business news before I flipped over to CNBC. John Gapper of the Financial Times impressions are pretty much in line with mine.
Fox is for fun, not investment advice
By John Gapper
,,,,,For me, the highlight of the launch of the Fox Business channel on Monday was when the sound went off as Ivanka Trump displayed the jewellery collection she is selling at her new Madison Avenue store.
The Donald’s daughter was a guest on the first outing for Happy Hour, an evening show on the US cable channel filmed in the Bull and Bear bar at the Waldorf Astoria. The hosts were Cody Willard, a long-haired hedge fund manager (and FT contributor) and Rebecca Gomez, a pneumatic brunette in a short, turquoise dress……
As Fox Business took to the air, preaching its gospel of democracy and bullishness, its anchors were confronted by a 140-point fall in the Dow Jones Industrial Average, prompted by a Treasury-endorsed super-fund to bail out structured investment vehicles holding $400bn of collateralised debt obligations. After a stab at explaining what “it means for your mortgage” they moved on.
But Gapper points out maybe this fluffiness is not so bad after all. For if the more “hard news” approach of CNBC with Cramer and the Fast Money crew giving rapid fire buy and sell recommendations gives the impression that the advice is actually useful it is an illusion.
Cramer himself from an LA Times interview with reporter Tom Petruno
Petruno: Given the sheer number of stocks you suggest either buying or selling in any given show, do you worry that you're encouraging people to trade in and out, even though all the research says the vast majority of investors won't make money as active traders?Let's just say I struggle with it. . . .
Cramer In Year 1 I was much more oriented toward "stock of the day." And I didn't like that. In Year 2 I went away from that. In Year 3, this year, I'm trying to say, listen, there are broader themes, there are broader sectors, you can try to pick the best of breed in the sector.I go back to the fundamental idea that stocks can be interesting. And therefore if you're interested, you will be better off than if you just let the broker handle you. You'll be a better client and a better investor.
Petruno: But you agree that very few people can make a lot of money actively trading?
Cramer:It's a sucker's game
So the FT’s Gapper is bang on when he writes:
Even an investor who confines himself to buying company shares based on Mr Cramer’s stock tips is hopelessly outgunned. He may now be able to make a trade online rather than by phoning up a broker but he is up against a battery of hedge fund quantitative traders whose computers execute trades in milliseconds.
So what is the investor with a 401(k) plan to do? He should start by turning off the television set, or at least by treating Fox Business and CNBC as news and entertainment rather than investment advice…..
Buying individual shares on the basis of what an analyst says on the box – presumably long after he has told his institutional clients – is a mug’s game. The wisest things to do – spread your money across funds, particularly low-cost index funds, rather than individual securities; buy and hold; consult a fee-based adviser, etc – do not require you to watch talking heads and tickers.
Come to think of it, Fox Business is on to something. CNBC, despite its on-screen warnings not to take Mr Cramer’s stock tips over-seriously, has a professional mien. You could almost believe, watching it, that you are getting the inside track on what Wall Street is really doing.There is no such illusion during Happy Hour and that has a bracing honesty to it. You will not discover much about structured finance here but you can see Ivanka Trump in a Manhattan bar. At least you know where you are
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