In “Interloper Adjusts to Investing as an Outsider” I outlined a strategy for the average investor who, dutifully employed outside the financial services industry, does not have time to follow every tick of the market. Conceptually, this involved have a loose, flexible view on the future course of markets and then constantly testing this thesis against new newsflow. With this post, we’ll apply the practice to the headlines from the NYT business section.
I picked the Times because it is the most general of business news sources, thus best reflecting the inputs of the average, non-professional investor. I currently have 35 headlines in my NYT Business section feed, dating from Saturday morning.
Stage 1: Ruthless Culling
The first task is to get the headlines down to a manageable number by ruthlessly ditching every headline with no relevance to investing portfolios. The key thing here is to remain focused – headlines may be interesting in any number of ways but if they do not represent potentially useful investment information the need to be kicked to the trash bin immediately before they become distractions. Times editors are not idiots, they will write the headlines with Mad Men skill to attract our attention. We must be cruel.
The mostly self-serving Media Circle Jerk headlines are easiest to root out, so we can ignore:
-Aristotle and Intermarkets Aim for Cheaper Political Ads (after silently cursing the possibility of more broadcast lying come election time)
-First Graduates from Advertising High
-Huffington Magazine Continues Digital Incursion
-Newspaper Work, With Buffet as Boss (This one caused initial hesitation – are media co.s like NYT finally cheap enough to consider? – but recent market volatility has left enough cheap stock opportunities than a voyage that deep into cigar butt investing territory is likely not necessary.)
The largest category of headlines headed to the digital landfill consists of lifestyle and self-help stories disguised as business news. It is also the source of the most annoyance, the home of patronizing CEOs who have completely repressed the random circumstance and luck that led to their success, the quirky fads that are both doomed and uninvestable, and the dreaded Leadership Consultants. In this category, we get rid of:
-Corner Office: Usher’s New Look Foundation on Leadership
-When Software Grades Your Essay
-The Boss: John Thompson on His Career
-Take Breaks Regularly to Stay On Schedule
-Forceps, Camera, Action
-Wearable Gadgets Upset FA Curb s On Devices
-Verifying Ages Online Daunting Task
-Taking Advantage of Low Rates
-So You Think You can Be a Hair Braider?
Next we have political stories in business story clothing:
-Drexel Hamilton Hiring Disabled Veterans (hugely admirable, not investable)
-Executive Pay Still Climbing (exec pay rarely, if ever affects stock value)
-Letters: Why Punish the Savers?
-Japan Reaches tax Deal That Could Help Shrink Debt
-The Quiet Giant of consumer Database Mining
-Hearst Plans to Bring Back Elle Accessories Second Chance
Stage 2: Interesting, but Reading the Headline is Enough
At this point we’ve whittled 35 stories down to 16. The next category are the articles where the headline tells us all we need to know:
-Greece Pro-Bailout Party Wins Election
-Broken [Institutional} Trust is Hard to Mend*
-European Leaders Present Plan to Quell Crisis
-Markets Signal Initial Relief At Greek Election Results
-China Stifles Debate on Economic Change
The most common response to constituents is either “Duh” or “Not New but thanks for the reminder”
Stage 3: “Make a Note to Request a Research Report on That Next Month”
-Journey to the Center of the Video Game Universe (“Wait a minute, didn’t I read that COD:MW3 made more money, and quicker, than Avatar?”)
-Digital Radio Royalties Start to Add Up
-Apple Enters Mobile Map World, Stepping Up Rivalry With Google (“I could care less about Mobile Maps, but there does seem to be evidence of Google stumbling lately”)
Stage 4: Argh, I’m going to have to open up and scan these
-Economic Reports for the Week of June 18, 2012
-Treasury Auctions Set for This Week
-Worried Banks in Europe Resist a Fiscal Union
Stage 5: Clear Your Head, Grab a Coffee, Read Carefully and Take Notes
Stages 1 through 4 were designed to get us here, to the stories that most matter, where either invested assets are at stake, or where opportunity could potentially lie:
-Euro May Have a Painful Path, Whatever Greece Decides (“I am tired of getting blindsided by European headlines, maybe this story will tell me what to look for”)
-Investors Relief Confronts Net Euro Crisis (See above)
-Mergers of European Mobile Carriers Expected to Grow (“Oh, really? Please tell me more about who is yielding 9%, is reasonably financially healthy and is most likely to be taken out, kthx”)**
-Why European Stocks May Be Ripe For long-Term Gains (“Wow, look at those yields. They all can’t be going out of business”)
There you have it, Interloper’s tour of today’s NYT Business section for fellow Outsider investors. It is general purpose, and I’m fully aware that many will have specific interests that will result in significant changes. Hopefully though, I’ve succeeded in providing a rough, if much longer than I intended, template that will assist investors in navigating the financial news fire hose.
*I personally read more or less every word Professor Cowen publishes, but put the piece in this category in keeping with the exercise’s constraints.
** Disclosure: I am recently long a European telco