In other words, CNBC makes viewers nervous in a very specific way. Nervous that they’re about to lose money in a market downturn. Nervous that they might miss a hot trend or stock. Or uncertain that they’re in the right sectors. Then an “expert” comes on and says, “Hey, you’re in the wrong sectors—it’s time to leave tech for industrials, financials, and health care.” In its sober, rational way, the network creates a sense of urgency. Although its tone is never like that of an infomercial, sometimes the message is similar. Act now.
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The problem is, hypervigilance is probably the worst quality most investors can have. “Sit on your ass,” the late Charlie Munger advised investors, emphasizing that when it comes to investing, less is more. Feeling nervous leads to excessive trading. And “all the evidence shows that individual investors do worse the more they trade,” says Jay Ritter, professor of finance at the University of Florida’s Warrington College of Business. “Buying and selling something based on what you see on CNBC is not likely to be a successful strategy.”
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