With manufactured debates and fake outrage, ESPN’s morning show “First Take” is equal parts surreal and preposterous. In what is now an all too familiar format, the show’s hosts sit across a desk from one another and spar over the latest sports headlines.
When Skip Bayless and Stephen A. Smith co-hosted, the show reached bizarre heights. Segments frequently deteriorated into shouting matches over questions that no sane person would consider, like whether LeBron James, a 15-time NBA all-star who has won three league titles and three MVP awards, is actually good.
Perhaps John Oliver, host of HBO’s “Last Week Tonight,” put it best when he said recently Smith is ” loud, wrong and tends to take pointlessly dramatic pauses,” a description that could easily apply to Bayless as well. Still, the duo created a buzz and generated ratings for the network, which is all ESPN cared about, and even though Bayless has since left “First Take,” the show lives on, as do dozens of others like it.
What may be hard for many to appreciate today is that Bayless and Smith were once accomplished journalists. Bayless wrote columns for prominent newspapers, including the Dallas Morning News and The San Jose Mercury, and was named Texas sportswriter of the year three times. Smith also had a long stint in print media, highlighted by his time at the Philadelphia Inquirer, where he wrote a weekly NBA column that was often newsworthy and insightful.
Now, each is a caricature of their former selves. In a world where being rational and levelheaded takes a back seat to “hot takes,” these two have few equals. There is no level to which they will not stoop, though neither seems to care because each has made millions in the process, for themselves and their networks.
Why bring this up? Because this approach has crept into all segments of the media, including the financial and investment press. In the pursuit of ratings and clicks, there’s an emphasis on spicy, everything-is-on-fire headlines. And that makes my job – and the job of every financial advisor across the country – more complicated, because when clients read that type of content, they become irrational and press me to make ill-advised decisions.
Think about some of the issues that have dominated the headlines in recent weeks: the continued trade spat between the U.S. and China, complications with Brexit, a manufacturing slowdown and the potential for a near-term recession. While on the surface these issues may seem serious, the reality is that from a personal investment standpoint, they are relatively inconsequential.
During my career, there have been precious few developments that have had a lasting, crippling impact on investor portfolios. One was September 11. Another was the speculation-induced Lehman Brothers bankruptcy that sparked the financial crisis. By and large, these other things don’t matter much, including, as crazy as it sounds, the prospect of a recession.
This phenomenon gets worse whenever there is an uptick in volatility. The third quarter was full of ups and downs, with August being particularly shaky. During this time, more than a few clients called to express concern, thinking they were taking a beating and expressing concern that the markets were on the brink of a crash.
My response took them by surprise: “You’re flat over the last few months, yes. But you’re up over double digits for the year.” Most were convinced they were losing money, thanks, in part, to headlines like “Want To Survive Whatever This Market Throws At You?,” which appeared recently in a major financial publication (The S&P is up nearly 20% this year, so the notion that anyone needs help to endure ‘this market’ is lunacy).
Shrewd investing is about patience, prudence and focusing on stable companies that have promising long-term futures. It’s not about reacting to the daily, weekly or even yearly whims of the market. But this message is at odds with the modus operandi of today’s media.
The sad fact is that no one wants to read a story with the headline “Disney is a strong company, and you should buy and then hold it for decades,” even as this is undoubtedly true. Similarly, even as Apple sold more than 200 million phones last year and is in the midst of an upgrade cycle, much of the current coverage is centered on how its streaming service will perform.
Sure, Apple TV+ could be a dud, while the company’s other recently introduced services look underwhelming. But none of this changes the fact that not only does Apple have remarkably strong brand loyalty but it continues to print money year after year, so investors would be foolish not to have exposure to it.
Having a unique point of view is one thing (For instance, many think Tesla is a house of cards that is bound to fail. I, for one, have a different outlook, strongly believing that it is a transformative company that just needs time to fulfill its vision). But overstating the importance of every trivial bit of information is another.
If you want to be a successful investor, save money, think long term, focus on blue chips and trust your fiduciary financial advisor. And, perhaps most importantly, ignore the day-to-day media noise.
Ross Gerber is CEO and president of Santa Monica, Calif-based Gerber Kawasaki Inc., a SEC-registered investment advisor with approximately $922 million in assets under management as of 10/22/19. Gerber Kawasaki clients, firm and employees own positions in Disney, apple and Tesla. Please seek guidance from an investment advisor before making any investment. All investments involve risk and may not be suitable for your situation. Follow us @gerberkawasaki on Twitter.