Will Entertain For Dollars

Henry Blodget lets the cat out of the bag with: The financial media's undisclosed conflict of interest:

The sad truth is that sound investment policy is boring. Diversify, reduce costs, aim to earn the market rate of return—even Stephen King would have trouble telling stories about that. But for the financial media to survive—at least the financial media devoted to helping you "profit" from reading/watching/listening—they have to suggest, over and over again, that there are exciting new places to put your money or dangerous places to remove it from. ....They have to keep you watching, listening, and reading, or else they—not you, they—will go bankrupt.

Unfortunately, the underlying message of such commentary—Do something!—is often hazardous. Once you have gotten the investing basics right, you should do almost nothing. Every time you make a change, you incur costs—transaction costs, tax costs, psychological costs, and opportunity costs. You also, in many cases, decrease your odds of success. The least predictable investment decisions are those focused on the short term (months and years). The most predictable, meanwhile, are those focused on the long term (decades). To the media, of course, the long term is death. How often will you pay or tune in to be told that you shouldn't do anything, that nothing has changed? Answer? Never.

So the media must find other ways to keep you entertained.

Which has implications for all the hysterical claims about the dangers of privatizing Social Security that one can read also. For non-hysteria, we could go here and here. No, really.