Clickbait is one of those new words that has caught on in our everyday vocabulary. It is amazing to me how technology has brought so many new terms to our language. What exactly is clickbait, and why should you be careful when it comes to financial articles on the internet?
What Exactly is Clickbait Anyway?
Clickbait is defined as “content whose main purpose is to attract attention and encourage visitors to click on a link to a particular web page.” Click-bait headlines typically aim to exploit the “curiosity gap”, providing just enough information to make readers of websites curious, but not enough to satisfy their curiosity without clicking through to the linked content.
I studied journalism in school, and for a while I had the desire to work for a newspaper. One of the terms we talked about in school was “yellow journalism”. Yellow journalism became popular in the in the early 1900’s, as newspapers became more competitive and battled for readers. Publishers would come up with the most sensational headlines and focus on scandalous material. The stories were designed to pique interest and sell newspapers. Most of the articles had very little substance, used unnamed sources, and were blatantly self-promoting!
Clickbait – Stick With the Tried and True
Obviously these methods work. We can see that today with the success of tabloids and other types of publications. Even though the internet is relatively new technology, marketers and content creators stick to the tried and true ways of getting your attention.
The financial media is guilty of this just like any other type of agency. In the world of the internet, most websites make their money through advertising. In order to get paid by an advertiser, it is important for people to actually visit the webpage. If you have a boring headline or an image that does not grab people’s attention, you probably will not see much traffic.
Of course, it is important to recognize the importance of good content and solid marketing. So, what makes something clickbait when talking about financial articles? In my view, it is articles that are meant to prey on fear, negative emotions, and lack of financial knowledge.
Clickbait – What Should You Look For
Here are a few examples that I made note of in December 2018. December 2018 was a bad month when it came to the stock market. Some of the headlines were factual, but still caused a great deal of alarm for the average investor.
“Worst start to December for the stock market since the Great Depression”
“Warren Buffett’s advice for a stock market crash”
“The stock market has wiped out its 2018 gains”
“Stock market selloff – good reason to worry!”
You can judge for yourself which ones you consider clickbait. I am particularly going to pick on the headline referencing Warren Buffett. I saw that article posted 6 times on the front page of a major news site in December! What days do you think it was posted? Was it the days when the stock market was way up or way down?
Certainly, we can learn from the wit and wisdom of Mr. Buffett when it comes to investing. History and mathematics show that most investors would be best served by buying stocks during a market drop and holding them long term. You can think of it as stocks being on a deep discount sale. Some of the advice in the article wasn’t terrible. However, the headline screams clickbait! It preyed on the fear and anxiety people were feeling during the stock sell off that took place.
Avoid the Doom and Gloom Clickbait
Selloffs and market drops are a normal part of our economic cycle. Not every down period in the stock market is a “crash”. However, that word sends shivers down the spine of most investors! There are people out there that have made a living predicting the next big market meltdown and preaching doom and gloom. The problem is that many investors buy into the negativity and end up selling off their portfolio at the wrong times. Articles like that can be a major disservice to the average person.
I will use one more example that I found frustrating. I found this article particularly dangerous because it discusses purchasing individual stocks based on one person’s recommendations. Academic research is overwhelming in showing that the average investor should focus on more diversity. Yet, a few weeks ago I saw an article entitled,“10 Stocks that Every 20 Year Old Should Buy.”
More Questions Than Answers
This article raises a number of important questions to consider. Besides the lack of diversity, what other things should a 20 year old be concerned about?
Why is the writer recommending these particular stocks?
Is the research based on these companies strictly looking at the underlying value are there other ulterior motives for these recommendations?
What do I know as an investor about each of these 10 businesses?
Do I really know enough about them to be confident in investing in them?
How would I react if these stocks dropped in price? Would I be inclined to buy more or sell them?
What historical data do I have on these companies? Do I see a track record of success?
What does decades of academic research tell me about young investors? Should they invest in individual stocks, or would they be better served in mutual and index funds?
What basis do I have to really trust the “expertise” of the writer?
Those are just a few questions to ask. If I am a young investor, it can set a terrible precedent to invest in stocks solely based on an article I read on the internet. Also, we live in a day and age where there is a fine line between entertainment and sound advice. A lot of people talk a great game on TV and the internet, but their track record on investment advice might be spotty at best.
Not Everything With a Great Headline is Clickbait
There are so many great sources of information on the internet. Every day I find useful articles that give a lot of excellent advice on money management and other financial topics. Just be careful. Make sure that the article aligns with your financial goals and doesn’t have a sensationalist feel to it. If it says something like “action you should take right now”, take it with a grain of salt.
I love this quote from Jim Rohn, “be a student, not a follower.” Find sources that provide education and encouragement and teach you HOW to think, not necessarily WHAT to think. My mission with Build Financial Muscle is to help provide sound advice and information based on academic research along with tried and true principles.
All of us have to navigate the world of clickbait articles and sensational headlines. Some of it can be entertaining, but we need to be careful. When it comes to your money, slow and steady beats flashy and attention-getting. Focus on your important financial goals and take action only on the things that will help you achieve them!