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Media

The media has a tremendous influence on us, but just like any other business, the media competes for your attention. The news must be well written or well told, or you will pick up a different paper or change the channel. Business and investment writers keep us interested by telling a good story. Reporters also search for the good sound bite to quote. By its very nature, the sound bite is short and catches our attention. A sound bite cannot convey any serious investment analysis. Sound bites convey stories. Most of the time, the media exacerbates our bias toward storytelling and away from formal investment analysis.

The media does a great job of relating facts. How much did the Dow Jones Industrial Average change? What were the earnings per share of that company? However, that is frequently not enough to convince us to make investment decisions. We also like to talk to other people. There is something about the social process of a face-to-face conversation that stimulates the brain. The media frequently gives us a sense of conversation. Television and radio hosts converse among themselves and with guest experts. On some shows, the audience can ask questions or make comments by calling in. But this pseudo conversation does not trigger our emotional responses as a real conversation does.


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