Tuesday, March 28, 2006

CNBC's New Contest

The staff of CNBC's Squawkbox has been flogging the show's new contest this week. It consists of selecting a "portfolio" of equities for an eight-week duration. The entrant with the best return over the contest's duration wins a very expensive Masserati.

What struck me about this event is the duration. Eight weeks?

When I think of "portfolio," I think of a selection of financial instruments whose objective is to provide long-term return for appropriate risk levels.

Instead, this eight-week financial sprint being offered by CNBC makes a mockery of the concept. While it's not my style at all, I would guess the winner will be found to have simply chosen the hottest momentum stocks du jour. Or be extremely lucky with one pick. Then again, the promos for the contest did not rule out using "inside" information, and it is not, technically, "real" investing which would make using such information illegal.

I guess what the contest makes very clear, though, is CNBC's commitment to entertainment over value-added. It's easy to imagine the network brass and the show's producers arguing over how long to let the contest run. The network probably wanted a few months of heightened attention, to justify the expense of the prize. I would guess the producers felt anything longer than one or two weeks would exceed the attention span of their audience.

If this is the paragon of responsible television financial news, we are badly served. I can't recall the CNBC slogan just now- I think it is something like "America's financial news source." What a pity. When we need investors to realize that longer investment horizons make for healthier portfolios, not to mention avoiding individual stocks in favor or paid, professional money managers, we have this nonsense pushing people in the other directions.

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