The world of personal finance is constantly changing…the products that students are evaluating today will be different tomorrow…robo-advisers, target date retirement funds, Venmo, mobile banking didn’t exist just a few years ago. This makes media literacy such a critical skill to develop in our students. To become financially capable they will need to be lifelong learners and know what sources to turn to in order to get quality, credible information. Unfortunately, in this era of fake news, this takes practice and a cynical eye.

That’s why this article from Bloomberg (“Read With Caution When There’s Money at Stake”) caught my attention. It highlights three lessons that readers should be aware of when reading the financial press:

No. 1. Know what you’re reading. It may be obvious, but it seems to need restating: You should have more than a passing familiarity with those writing about finance. Authors, analysts, firms, websites, news organizations all have a history. You should be familiar with what they cover, their track records and any biases or conflicts…

No. 2. Understand why you consume media. There are many reasons to read financial news. However, if you are reading various websites or news outlets looking for some holy grail of stock tips or information telling you when to jump into or out of the stock market, you are wasting your time. It should go without saying that if anyone really had that information, they would be quietly using it themselves to gain a profit and not sharing it with the public. That this even needs saying should tell you how much time is wasted reading the wrong things.

No. 3. Understand the motives of content creators. This goes beyond mere bias or conflicts of interest and strikes at the heart of the matter: What’s in it for them?

Have students choose one of these three articles to answer the three questions about them 1) Are they coming from a credible source? 2) Why are you reading this article (other than your teacher asked you to) 3) Who wrote the article and what’s in it for them?

• These Three Companies Are Paving the Way to Breast Cancer Treatment (Forbes)
  • This article was cited in a recent SEC lawsuit: “In the scheme, writers and communications companies were allegedly enlisted to write flattering commentary in publications like Forbes and Seeking Alpha — that appeared to be impartial. The SEC claims some 250 articles written about stocks — including several biotech companies — contained omitted or misleading information about whether the author got compensation from a third-party source.”
  • What makes this article suspect when answering the three questions?

• Wall Street Titans Say Snapchat’s Stock Will Soar Nearly 20% (Fortune); Who are the banks saying Snapchat’s stock would soar?Do they have a business relationship with Snapchat?

• Choose your own article about a company they are interested in as a stock investment.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.