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Behavioral Intelligence

Do We Really Care Who Was #1 Stock Picker?

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The Wall Street Journal recently published “And the No. 1 Stock-Fund Manager Is…”.

I clicked to read. As I read it I asked myself, “Who cares? Why is this important?”

Does it Help Investors?

How does knowing who the #1 stock picker, #1 fund or #1 anything help investors? It doesn’t. At least I can’t think of any reason how this could help investors.

Now, how may it hurt investors? That is more like it. It encourages and entices investors to chase performance. It is natural. When we see something better than another, we want it. And when it comes to investing, we are often oblivious to the role of chance/luck and the role of skill.

Why Does the Media Report On It?

If the information doesn’t help investors, and may actually cause them to do worse, why would the media report on it? Because the media could care less how an investor fares. That is not their mission. Their mission is to get clicks. They are executing their strategy just fine.

The problem isn’t the media. It’s OUR incorrect perception of the media. We all get it, cognitively. Yet, we still click and we are still influenced because of the roles of latent, often unconscious biases.

Related: The Stupidity of “Smart Money”

Viewer Beware

Financial pornography abounds. It is sexy. It is exciting. And yet destructive to a real investor. It will not stop because it accomplishes its goal. It gets us to click. It doesn’t care if we act on it or not, just that we consume the content.

It can be helpful to remind ourselves the purpose and goal of the financial media. We don’t have to stop watching – although that may be the best solution. We just need to see it for what it is; click bait and entertainment. So long as we don’t act on it, it won’t hurt us. But that is a big assumption.

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