The Shepard Tone of Financial Media

You may be old enough to remember when television stations signed off the airwaves for the night. Some stations ended the day’s broadcasts by playing the National Anthem. After that, you saw nothing but a test pattern until the morning programming sign-on.

Then came the cable TV age. In 1980, Ted Turner and others founded the CNN cable channel and started what came to be called the 24/7 news cycle. Insomniacs could now keep up with news happening on the other side of planet Earth. The early 1990s inaugurated the Internet Age, which eventually spawned the Social Media Age. This gave us not only instant access to news, but instant access to everyone’s reaction to the news.

As an investment professional for much of my working life, consuming and analyzing information has always been a big part of my job. With all that data at my fingertips, it has never been easy to separate the signal from the noise. But it has to be done when assessing current or future investment risks. With what seems like ever increasing sources of information available, comes increasing noise along with it. I often feel overloaded with information. Maybe you feel the same way.

The inability to separate the signal from the noise can be a serious problem for some people who tend to take all information at face value and give it equal emotional weight. If a person’s sources of information (especially headline news items) are not well diversified, then they can become subject to an “echo chamber” effect, which serves to magnify the importance of whatever topic is at hand. This, in turn, can lead to a heightened state of anxiety and fear.

Daniel Kahneman, in his book Thinking Fast and Slow, describes how this can work in a concept called the “availability cascade.” Kahneman, a PhD in psychology, won the Nobel Prize in Economics for his groundbreaking research in what is now called behavioral economics. He writes:

“An availability cascade is a self-sustaining chain of events, which may start from media reports of a relatively minor event and lead up to public panic and large-scale government action. On some occasions, a media story about a risk catches the attention of a segment of the public, which becomes aroused and worried. This emotional reaction becomes a story in itself, prompting additional coverage in the media, which in turn produces greater concern and involvement.”[1]

It certainly seems like the media is adept at keeping one or more of these “news events” going at a time. After all, bad news sells and keeps advertising revenues flowing in.

You can understand how daily consumption and processing of this can be a source of some anxiety and worry, not to mention exhaustion. Long term, it may even be mentally and emotionally unhealthy. What would be the signs of unhealthy obsession with the 24/7 news cycle? The Diagnostic and Statistical Manual of Mental Disorders (DSM) is used by psychiatrists to help diagnose their patients.  While it does not specifically list addiction to breaking news as a disorder (like Internet Gaming), it does describe some symptoms of what is called Generalized Anxiety Disorder (three or more of the following “occurring more days than not for at least 6 months”):

  • Excessive anxiety or worry
  • Restlessness
  • Being easily fatigued
  • Difficulty concentrating
  • Irritability
  • Muscle tension
  • Difficulty sleeping[2][3]

Fortunately, most of us do not suffer from Generalized Anxiety Disorder, although on any given day, we might experience one or more of these symptoms on a short-term basis. The point is that we all need to be mindful of how we process the flood of information we are exposed to every day.

One of the best films I’ve seen in the last couple of years was Dunkirk, the story of the British evacuation of troops trapped by the Nazis in May of 1940 on the beaches of Dunkirk, in Northern France. While the acting and cinematography were excellent, the most memorable aspect of the film, for me, was the music.  The composer Hans Zimmer used an auditory illusion called a Shepard Tone in the soundtrack to create a constantly rising pitch which, together with the action on the screen, kept you on the edge of your seat through the whole film. A Shepard Tone is like a “barber pole” of sound, seeming to rise infinitely.

Daily over-exposure to financial news can also create this sense of rising tension when thinking about our wealth and investments because so much of that information is focused on future uncertainties around topics such as tariff wars, inverted yield curves or negative interest rates. These issues are discussed in the media ad nauseum, to the point where we are led to believe every topic is a crisis ready to explode. As already discussed above, this can lead to unhealthy (and unnecessary) worry and fear.

In reality, what you’re hearing, what you’re feeling, is nothing more than a news-cycle Shepard Tone, bringing an ever-increasing sense of doom and gloom. It’s good to be informed. Being caught up in the noise machine of financial media is not.


John serves as Chief Investment Officer for Coyle Financial Counsel and is responsible for overseeing the investment process. John’s prior experience includes managing institutional fixed-income portfolios for corporations, pension funds, non-profit organizations and foundations at several large, global asset managers. With more than 20 years of institutional investment experience, he is energized by helping individuals understand the role investing plays in meeting their long-term financial goals.
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All information is from sources deemed reliable, but no warranty is made to its accuracy or completeness.   This material is being provided for informational or educational purposes only, and does not take into account the investment objectives or financial situation of any client or prospective client.  The information is not intended as investment advice, and is not a recommendation to buy, sell, or invest in any particular investment or market segment.  Those seeking information regarding their particular investment needs should contact a financial professional.  Coyle, our employees, or our clients, may or may not be invested in any individual securities or market segments discussed in this material.  The opinions expressed were current as of the date of posting, but are subject to change without notice due to market, political, or economic conditions.

Copyright © 2019 Coyle Financial Counsel.  All rights reserved.

[1] Kahneman, Daniel. Thinking, Fast and Slow (p. 142). Farrar, Straus and Giroux. Kindle Edition.

[2] The Diagnostic and Statistical Manual of Mental Disorders (2013)

[3] Of course, this blog is not dispensing medical advice, but people experiencing excessive anxiety and worry may want to consult their mental healthcare professional.


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