Abstract
The central role of the media for people’s sentiment and for capital markets has been analysed by a broad range of literature, referenced from several strands of academic research. Applying a vector autoregression method to a unique set of TV news, consumer sentiment and excess flows of mutual funds, I have found evidence that daily TV news is reflected in consumer sentiment and that this reflection varies according to specific news topics. However, I have not found any evidence that this has an impact on viewers’ portfolio allocation decisions. Mutual fund investors neither seem to put their money where their newly gained insights from the TV news are, nor where their sentiment is. Anchoring also appears to play a role, at least for US investors. These findings are robust in relation to different measures of fund flows and as an alternative indicator for sentiment in the news media.
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