If you wanted to become a sportsperson, would you just watch that sport on television and hope to be a champion? I guess not. In the same way, if you want to be a good investor, watching TV shows on investment strategies may not be the best way to prepare. If you are serious about investing, you must learn about equity, commodities, real estate and debt markets. But I believe that learning comes from books. It is difficult to learn from the media and I have valid reasons for saying this.
To create long-term wealth, a financial adviser must be qualified to set goals, create a financial inventory, determine asset allocation and select products. However, thanks to the nature of the medium, financial advisers on TV end up giving quickfix solutions and get-rich-fast tips on the stocks and funds in the news. In a 30-second soundbyte, they might tell you how to go about planning your finances for the next 30 years.
Warren Buffet says ‘inaction’ for long periods is a sensible strategy. However, the media can make you feel rotten for doing nothing. Programmes titled “Is it time to switch from equity funds to gold funds” can compel the retail investor to call his “adviser” who will help him churn his portfolio.
When an “expert” speaks on TV, it sounds more like a weather prediction or astrology than investment advice. The viewer gains nothing. For instance, I have caught myself saying: “Before you invest, you should do a proper fundamental analysis of the company,” which means nothing. There’s worse. “This share looks very weak fundamentally but, technically, I don’t know if it is a good time to sell or some upside is still left”. This might be technically accurate, but it is utterly useless for the lay investor.
I might tell one guest on a TV programme to “reduce exposure in Kotak K-30 and invest in Franklin India Prima” and tell another “sell Franklin India Prima and invest in Kotak K-30”. Am I contradicting myself? No. One investor needs to shift from large-caps to mid-caps while the other needs to move from mid-caps to large-caps. The advice depends on the need of the investor. But this makes no sense to the bewildered viewer who doesn’t know the background.
Investment advice is very simple but it has to be delivered in different ways to different people. At times, it is like a teacher’s lesson, sometimes like a friend’s advice and sometimes a parent’s explanation to a child. It is difficult for the mass media to customise advice for each viewer. This is the crux of the problem. Also, there are other constraints like time which restrain experts from giving detailed explanations.
One interesting exercise for investors is to maintain notes about what each adviser on each channel says. Make a summary and read it after six months when you need a laugh. This is also a good way of checking the credibility of these advisers. If viewers check the statements with facts, it might force TV shows to be more accountable.
The media must be responsible about the financial advice it dishes out. Experts on air enjoy immense credibility and must not abuse it. The media can be instrumental in creating awareness about financial matters, but it should not give one-fit-for-all solutions to financial problems.
P.V. Subramanyam is Financial trainer, Iris.
