Whenever the stock market suffers a sharp decline, many in the media bring out the gloom and doom. Front-page headlines such as "The Beginning of the End" torment investors about holding on to their stocks. An avalanche of such articles, like that seen in late 2002 and early 2003, often coincides with a bottoming stock market. When the stock and real estate markets slid in the late 2000s, scores of "the sky is falling" pieces populated the pages.

Another particularly popular subject for such reporting is the cost of a college education. (See, you can write a sentence about the cost of education without including the word skyrocketing.) Scores of articles horrify parents with estimates of the expected costs associated with sending Junior to campus. The typical advice: Start saving and investing early so you don't have to tell Junior that you can't afford to send him to college.

To sell their publications, magazines and newspapers sometimes entice readers with promises of high returns. This can easily lead to crummy advice.

Consider the gaffe made by a Money magazine piece titled "Where to get safe, high yields." The title itself should have been a red flag: It's impossible to find a safe high yield. To get high yields, you must be willing to accept more risk. In the Money article, three of the recommended investments were limited partnerships (LPs) sold through commission-based brokers. These products' high commissions and ongoing fees doomed even the luckiest of investors to mediocre or dismal investment returns.

The Money article even asserted that investors could earn annual returns as high as 18 percent on some LPs. Students of the financial markets know that the best ownership investments, such as stocks and real estate, return no more than 10 to 12 percent per year over the long haul. To expect more is to hold unrealistic expectations.

Historically, one way that journalists have attempted to overcome technical gaps in their knowledge is to interview and quote financial experts. Although this may add to the accuracy and quality of a story, journalists who aren't experts themselves have difficulty telling qualified experts from hacks. (See Chapter 16 for a discussion on examining the qualifications of writers who offer up financial guidance.)

Daily financial press writers also contribute to today's shortsighted investment environment and encourage readers to adopt similarly misguided outlooks. It's common for daily newspaper charts to show the stock market's movements at five-minute intervals throughout the previous day. This focus on the noise of the day causes nervous investors to make panicked, emotionally based decisions, such as deciding to sell after major stock market falls.

Of course, the daily print media aren't the only ones chronicling the minutiae. As I discuss elsewhere, other media, including television, radio, and the Internet, cause many investors to lose sight of the long term and the big picture.

Some of the worst financial advice is brought to you, not surprisingly, for "free." Nationally, thousands of radio stations have financial and money talk shows. Money and investing shows are proliferating on television cable channels. Because listeners don't pay for these shows, advertising often drives who and what gets on the air, as I discuss in Chapter 16. But I've found that some of the worst offenders are local — and even national — radio advice programs.

Some of these shows are "hosted" by a person who is nothing more than a financial salesperson. That person's first, and sometimes only, motivation for wanting to do the show is to pick up clients. Many local radio investing programs are hosted by a local stockbroker (who usually calls himself a financial consultant or planner). A broker who reels in just one big fish a month — a person with, say, $300,000 to invest — can generate commissions totaling $15,000 by selling investments with a 5 percent commission.

But radio suffers from more than brokers trolling for new clients, as evidenced by the case of Sonny Bloch, a New York radio personality who was indicted for fraud. The Securities and Exchange Commission found that Bloch was receiving kickbacks from investment brokers for endorsing some pretty crummy investment products on his nationally syndicated radio show. The SEC also filed a complaint against Bloch for defrauding investors of millions of dollars to supposedly purchase some radio stations. Instead, according to the SEC, Bloch and his wife used hundreds of thousands of dollars to purchase a condominium. Partners in a precious metals firm (DeAngelis Brothers Collectibles) that Bloch regularly endorsed on the air were arrested for theft and ended up in bankruptcy.

At 9:30 a.m. EST the New York Stock Exchange opens, and transactions start streaming across the bottom of television screens tuned to financial cable stations. Changes in the major market indexes — the Dow Jones Industrial Average, the S&P 500, and the NASDAQ index — also flash on the screen. In fact, these indexes are updated almost every five seconds on the screen. Far more exciting than a political race or sporting event, this event never ends and offers constant change and excitement. Even after the markets close, reporting of still-open overseas markets continues. The performance of futures of U.S. stock market indexes then appears on screen.

Some journalists, often in an effort to overcome their own lack of knowledge, like to interview "experts." A classic example of this problem is the media exposure that author Charles Givens used to receive. Givens became a darling of the media and the public following unprecedented, consecutive three-day appearances on NBC's Today show.

"When Charles Givens talks, everyone listens," said Jane Pauley, then co-host of the Today show. Bryant Gumbel, the other co-host, said of Givens, "Last time he was here, the studio came to a complete stop. . . . Everyone started taking notes, and I was asking for advice." Givens regularly held court on the talk show circuit with the likes of Larry King and Oprah Winfrey.

The Givens case highlights some of the media's inability to distinguish between good and bad experts. It's relatively easy for the financially sophisticated to see the dangerous, oversimplified, and biased advice that Givens offers in his books. In his first best-seller, Wealth Without Risk, Givens recommended investing in limited partnerships and provided a phone number and address of a firm, Delta Capital Corp. in Florida, where readers could buy the partnerships. Those who bought these products ended up paying hefty sales commissions and owning investments worth half or less of their original value. Besides the problematic partnerships he recommended, court proceedings against Givens in a number of states uncovered that he owned a major share of Delta Capital.

So how did Givens get on all these national programs? He had a shrewd publicist, and the show producers either didn't read his books and/or were themselves financially illiterate. Talk shows and many reporters often don't take the time to check out people like Givens. Most of the time, the books are never read. Producers, who themselves usually don't know much about investing, often decide to put someone on the air on the basis of a press kit or a call from a publicist.