The cable news networks are not in business to keep us informed but to keep us tuned in and sell that attention to advertisers. Depending on the news network they all use different tactics, using our own fears and biases to drive engagement. The news networks aren’t evil, but their incentives certainly don’t line up with a disciplined investors best interest.
They practice some common strategies to both capture our attention, but also playing games with our minds and make us feel like we the readers are the smart ones.
A fictitious, but common themed headline of “New home prices jump at the highest rate since 2007” comes to mind.
This seemingly innocuous headline has much more clickbait than most would think at first glance. It nudges us to click on an article about the hot real estate market which most of us have seen firsthand for the last few years, seeing prices tick higher and the market get hotter and hotter.
It’s my opinion that CNBC knows that most of their readers are very aware of what happened to the economy and real estate market in 2008 during the financial crisis and the hot real estate market that preceded that. They also know that a nervous reader that’s interested in getting information about a potential crash is an engaged reader, and that is exactly what they (and their advertisers) want.
Most articles like this do not explicitly predict next market crash at all but it’s the subtle headline and timeframe parallel that gets the attention and directs it where they want. It’s then very easy for most concerned, educated individuals with a nest egg to infer that the last time the real estate market was this hot, the market melted down in a panic and millions of dollars were lost.
Creating this concern is certainly a strategy they use to increase engagement level of readers/listeners, but they are also playing on the “sophistication” strings as well. The article is designed to make us feel like we are the smart reader who’s not just reading about a hot real estate market, but we are anticipating what’s coming and we can see trends better than others.
We have been in a boom-and-bust cycle for the past 25 years. Most investors have made quite a bit of money, lost roughly half, made it back, lost half again and made it all back…again. Perhaps that trend does continue and who can blame us for being on edge? We certainly need to be prepared for that but a 5-minute article with a few bullet points of data and 3 advertisements along the side doesn’t feel like the solution to me.
A boring headline of “Real estate fundamentals remain strong, 3-5% growth expected” wouldn’t get much attention. It always feels smarter to see a downtrend before it happens, and we leave the page feeling a bit more prepared than the others. Now we can check CNBC.com again in the afternoon, or tomorrow to see what else we should keep our eyes on, and the circle continues.