Inappropriate Behavior on Cable TV

Have you ever wanted to encapsulate everything which is meretricious, deplorable, and downright odious about financial TV in one five-word phrase? For most of us, "Mad Money with Jim Cramer" does the trick perfectly well. But you – you can do better. Ladies and gentlemen, I proudly present the winning phrase: "CNBC Million Dollar Portfolio Challenge".

The Challenge was an ill-advised stunt from the very start. It treats stock-market investing as a game where he who takes the most ridiculous risks wins. It encourages individuals to try to beat not only the market, but everybody else: a 2,000% return doesn't even get you to the finals if enough other people manage to get a 2,200% return. And contestants are aiming for the kind of returns on a daily basis that most sensible investors would be happy with on an annual basis. In a nutshell, it turns the serious business of investing into a hype-drenched horse race seemingly designed to glorify the most destructive and idiotic behavior possible.

So, it's good that BusinessWeek is taking the Challenge down a few notches. But it's depressing that Tim Catts concentrates in his story on a very narrow reading of what is and what is not acceptable with such games. He never once takes issue with the basic idea of the Challenge, or how it works. And when one of the contestants admits to Catts that he was gaming the system from the very start, Catts is quite unfazed:

When Kraber heard about CNBC's million-dollar challenge earlier this year, he knew he wanted to enter. But it wasn't until he read the rules of the game that he figured he had a pretty good shot at making the finals. The key was that CNBC put no limit on the number of portfolios a player could manage, and only the best-performing one would count. So Kraber, with his expertise in statistics, computer-programming, and stock selection, could set up hundreds of different portfolios, all pursuing high-risk, high-return strategies. By sheer chance, at least one of his portfolios would do well, and he figured that with smart strategic picks he'd rank near the top of all the participants. "I realized I had an almost 100% chance of making the finals," he says.

In the end, Kraber ended up putting together no fewer than 1,600 different stock portfolios, just to make perfectly sure that one of them ended up doing really well. Did he violate the rules? Well, they do say:

CNBC reserves the right to terminate Contest participation by any Participants suspected of cheating, attempting to exploit the contest or other inappropriate behavior. All such action will be determined by CNBC in its sole discretion.

It seems to me that Kraber, quite clearly, was "attempting to exploit the contest". Yet Kraber, according to the BusinessWeek story, is the good guy! He complains that other contestants engaged in even more egregious behavior. By fiddling around with queues in browser windows after the market closed, says Kraber, they effectively managed to buy stocks in the knowledge that their earnings releases would beat market expectations and result in a large boost to their share price the following day.

If the allegations are true, then those contestants should probably be disqualified for inappropriate behavior. Kraber doesn't need to be disqualified, since he only managed to come in in 12th place anyway – but if he were a serious contender, then I'd be minded to disqualify him, too. But then again, I'd be minded to disqualify the entire Million Dollar Portfolio Challenge as the epitome of inappropriate behavior on the part of a cable TV channel.

And the scary thing is that Rupert Murdoch's new business channel hasn't even launched yet. I fear to think what kind of stunts the Fox masterminds are going to come up with to boost ratings.

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