A self-described expert in your favorite media outlet is forecasting growth for a particular investment. Should you take their advice and buy?
Charles Mizrahi says no. You should put aside what the media is saying. Instead, base your financial decisions on rationality, logic, facts and analysis.
In this video, filmed at the Platinum Mastermind in Costa Rica, he reveals the media’s secret agenda and explains why much of the investment advice in the media is based on little more than emotion.
THE PURPOSE OF THE MEDIA
The media is not there to give you information. It’s there to sell advertising.
That doesn’t mean that everything the media says is false, but think about it this way. If a media outlet sees that they can make more advertising sales by spreading false information, there’s nothing stopping them.
It’s called freedom of the press. They can say anything at all and they won’t be penalized for false information.
THE MEDIA USES CONFIRMATION BIAS
Influence is a book that Robert Cialdini wrote in 1984 because he was bothered by being conned by sales people. In the book, he wrote about 6 principles that sales people use to influence us.
One of these, for example, is the law of reciprocity. If someone invites you to their wedding, you feel it’s right to invite them to your wedding. If they give you a gift, you feel you need to give them a gift.
The principle that the media uses to influence us is the confirmation bias. The media’s job is not to challenge people’s beliefs or create new beliefs. It’s to reaffirm people’s existing beliefs, however wrong they may be.
This is because when people are told what they already believe, they are happy and more likely to buy whatever is being advertised. If they are told something they disagree with, it unsettles them. Not only will they not buy whatever is being advertised, but they probably won’t return to that media outlet again.
Unfortunately, most people believed that the financial crisis would be the end of the economy and we were all doomed. They were in a gloomy mood, and so the news reflected that. There were a few voices who challenged the gloom and doom, but they got drowned out.
Remember that the media is not there to tell you the truth, but to appeal to your emotions and reaffirm your existing beliefs. When making investments, however, you need to put your emotions aside and base your decisions on rationality and logic.