Journalists and Financial Advice

By Chris Roush
April 9, 2009

The whole Jim Cramer brouhaha has had me thinking about what business journalists should be telling their readers and viewers.

If you haven’t been paying attention, “Mad Money” host Jim Cramer – and CNBC – was criticized by “The Daily Show” host Jon Stewart about many of his on-air recommendations that have since gone bad. Cramer went on Stewart’s show and apologized, but also said that he was in the entertainment business and that his show was partly entertainment.

Let’s assume for the sake of this discussion that Cramer is a business journalist, although he spent the bulk of his career as a money manager.

The question at hand is whether business journalists should be dispensing advice.

Plenty of business journalists do offer advice to their readers and viewers. Many of the top personal finance journalists, such as Jane Bryant Quinn and Suze Orman, have made a name for themselves by offering well-researched, sound advice.

There’s also plenty of business publications focused around this concept of offering advice. Money, SmartMoney and Kiplinger’s Personal Finance are but a few that regularly have stories about the best stocks or mutual funds and other items.

There’s some type of advice dispensed by personal finance journalists that I’m comfortable about. These include stories that I see about the pros and cons of certain types of life insurance, or whether to use a stock broker or trade online. The bulk of this type of advice is done fairly and can be an extremely valuable service to consumers.

Still, I’m uncomfortable with the concept of a business journalist telling readers or viewers what stocks or mutual funds to buy and sell. While many such stories rely on so-called “experts” to pick and choose, they still come off as the opinion of the journalist.

That’s a scary proposition. And it’s one that I don’t think is good for business journalism in the long run.

Here’s why: We’re journalists, not money managers. We’ve already been criticized for failing to warn consumers about the pending financial crisis. (I would argue that there were plenty of warnings in the biz media, and put a lot of my retirement money into money market accounts as a result.)

But what would have been the reaction if the collective business journalism community had told their readers to get out of the stock market back in late 2007 and there had been no 50-percent drop?

I shudder to think of how business journalism would have been perceived by the masses if that were the scenario.

Copyright © 2009 Donald W. Reynolds National Center for Business Journalism