When Dalal Street becomes a soccer ground

by Vivek Kaul/ DNA Money

With a week to go for the football world cup, Kunal Bajpai, an avid investor in the stock market, is getting ready to see the mega event. His wife finds rains in Mumbai depressing and plans to join her parents at her hometown, like every year. This would leave him in peace to watch the matches, rather than having to sit through all the saas-bahu serials she made him watch.

Bajpai had just finished reading What Goes Up, The Uncensored History of Modern Wall Street by Eric J Weiner. The book has a very interesting analogy on how business channels covering stock markets looked more like sporting events.

Bill Griffeth, an anchor with CNBC, commenting on the channel, says in the book, “You had a pre-game show, a half-time show and a post-game wrap-up. It really made sense when you thought about it, because the format was so familiar to the kind of audience we were going after anyway. We’ve long known that a good piece of our audience is male, and it didn’t take a rocket scientist to figure out that it might be a good idea to use that same kind of mentality here and appeal to the same type of demographic that ESPN appeals to with its programming”.

Tom Rogers, former president of NBC cable, says in the book, “At CNBC, what we intended to do was to give people a sense that everyday you had this huge event, the way a football game is a huge event on Sundays”.

Having read this, Bajpai realised that business channels in India were no different from their American counterparts. Everyday, the stock market is presented as a big event. And in their zeal to present everyday as a big event, television show hosts have an explanation for every rally, every sell-off and everything that happens in between.

It doesn’t mean that a particular rally or a sell-off happened because of the explanation being offered. What is surprising is that TV hosts start giving reasons for a particular event as soon as the information comes in. What helps them is the fact that with so much information being available these days, something insightful can always be said.

This makes stock market broadcast more like a sporting event, where in the commentator has to comment immediately. But the difference between a sporting event and the stock market is that in a sporting event, things happen in front of you and hence can be commented on. A stock market does not work like that.

By broadcasting the way they have been, business news channels end up over-simplifying things. And this leads to a lot of people, who do not have a good understanding of the market, watching these channels and then investing in the stock market.

As Griffeth points out in the book, “My take is, and this is probably controversial, and I don’t know if the people at CNBC would want me to say this, but there were lots of people watching us in the late nineties who had no business watching CNBC, because they didn’t understand fully how the market works, or the companies they were investing in, or the investment process”.

Something similar seems to be happening in India right now. As the markets have started falling, investors have been trying to make the business media the scapegoat. But as Griffeth points out “When they lost money – and I am generalising here – they were unwilling to take responsibility and looked for a scapegoat. In that case you tend to want to shoot the messenger. Our job was then and always will be, to put a mirror up to what’s going on. If your favourite sports team is in the big game and they lose, do you yell at the announcer?”

The example is hypothetical

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