Category Archives: Media

Who’s more afraid of obsolescence, newspapers or the GOP?

It’s ironic that the bandleaders for anti-Tea Party derision form the one group more afraid of the future than the cultural Luddites in the GOP. Or did it escape your attention that newspaper readers are just as old, white and predominantly male as Republican constituents? Or that newspapers and traditional media are far more at risk of obsolescence than the Republican Party?

It’s no secret that I think the most savage, fearless and insightful cultural commentary is found at the Last Psychiatrist blog. In “How does the Shutdown relate to Me” he writes,

The shut down was the inevitable consequence of a government not permitted to compromise, smothered by the oppressive gaze of a kamikaze media that will kill itself and your country just to get a headline today.  …   The media demands partisanship, conflict, opposing sides, but despite having 24 hours to fill will never, ever explain the interplay between complex issues, preferring to feature them in segments while hyping them to a crisis

Within the context of his post, I think this is accurate. But, the implication that the media is sitting in the newsroom, twiddling their moustaches and giggling at what they’ve wrought in terms of public discourse is laughable.

I work in a newsroom.  Outside of a WWI trench its hard to think of a more steadily traumatized, demoralized group of people. I’ve seen three sets of layoffs in 15 months. In short, this is not an environment exuding power and influence – it’s a group willing to do almost anything to hang on.

To make matters worse, the older journos have discovered they’ve been lied to. They were taught in J school that reporting is a calling, similar to medicine or the priesthood. That the very fabric of democracy would be rent asunder if they didn’t do things just so. For them, adherence to journalistic convention has a theological bent that, like the GOP, makes it really difficult to adapt to the new context. Belief in the fifth Estate is part of a wider worldview where they play a central part. They will defend it like cornered rats. Until they get fired.

So there is a feeling of debasement as now the media serves a similar role in politics as margin debt during bull markets – they wait for the wire story from Reuters and then provide the leverage, the outrage and the hype. Desperate for attention, everything must be more momentous, more terrifying, more heartwarming “PLEASE JUST LOOK WILL YOU! WE”LL DO ANYTHING! HERE’S ANOTHER KITTEN ITS GOT A LITTLE WHITE MASK LIKE A RACCOON! – an entire industry chock full of Miley Cyruses only with less focus.

I used to think it was unfortunate coincidence that traditional media outlets are being starved for resources at a time when the body politic is so fractured and angry but really, it’s all part of the same erosion in public trust. Marriage, news media, Congress, the presidency, the financial system – what were considered the institutional pillars of society are either changing fundamentally or almost universally reviled.

The Internet, and the access it provides, has unleashed incredible changes and investors should recognize a familiar pattern  – the extension of innovation continuing until something breaks. The limited liability corporate structure mobilized an ocean of investment capital until the South Sea bubble wiped everyone out. Securitization was another great idea that, extended far beyond the realms of common sense, almost destroyed the global financial system.

The shutdown highlights the bizarre paradox of the Internet access and the likely source of the social version of “something breaking”  – the rise of tribalism in response to broader reach. Confronted confused with ten different perspectives on what’s happening or how to live or who’s fault everything is, and unable to completely trust any of the sources, vast swathes of the population are saying “Fuck it, I don’t like what I’m seeing online, I don’t feeling confused and afraid so I’m going believe what’s emotionally and financially convenient for me and hang on to it like grim death, no matter who gets hurt.”

The Internet means that the local news monopolies and duopolies have been broken and there is no unifying, central source of information. I’m not saying the New York Times is unreliable, by the way, just that a lot of people believe it is. And they’ve reverted to outlets more conducive to their sensibilities no matter how irrational they are. This happens on the left and right.

Longer term, we’ll sort this out. But until then, the death throes of a number of conventions and institutions will likely provide us with a continual series of messy spectacles.

Outsider Investor Guide to the NYT Business Section

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?

Too Obscure:

-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

Routine Ground Balls and the Traits of Real Market Professionals

I played baseball for 14 seasons over 15 years and was competent enough to get scouting attention at a younger age. I had one great coach, “Skid”, who, although every second sentence he uttered would now get him arrested under hate speech statutes, also frequently provided baseball-related thoughts that carried well into everyday life. One of his tenets, usually brought up by someone getting cocky was that, “you could have season tickets in the front row at Yankee Stadium and still never understand how good those guys are”. This statement has multiple implications but I’ll focus on the one in particular that has most informed my trading and investing.

Almost everyone on my team had, at one point in a game or practice, made a play remarkable enough to be featured as a play of the night on SportsCenter . They just happen as a function of instinct and circumstance. Even though a selected few of them had the physical tools necessary – speed, arm strength, etc –  no one was consistent enough at routine plays to ever challenge for a major league spot. The point Skid was making was that major league players were virtual machines, never making a mistake on routine ground balls and making difficult plays look mundane. (If you’ve ever wondered why most Major League middle infielders are Latin American, remember that most of them grew up in shithole barrios where playing fields were more or less parking lots with rocks and random chucks of concrete. When they get to the pool table surfaces of the big time they find ground balls, no matter how much spin’s on them or how hard they’ve been hit, comically easy).

The average fan, then, believes that Major League players are determined by diving, flashy plays when nothing could be further from the truth. In addition to having hands that move like compressed lightning at the plate (something that can’t be taught unfortunately), it is machine-like reliability and mental discipline that separates the talented from the true pro.

The corollaries to trading and investing are clear. The media will be happy to feed us SportsCenter-like highlights of big trades. The story of the real pros, the constant, consistent grinding out of profits informed by decades of practice no matter what kind of bad hops the market generates will remain less newsworthy. Given the choice, like baseball scouts the market will reward participants that make fewer errors, not those that generate the flashiest, unrepeatable trades.

Cumulatively Disillusioned: A Partial Defense of Greg Smith

Disaffected  ex-Goldmanite Greg Smith clearly possessed a Puritan streak bordering on the Messianic and this led many to immediately, reflexively discount his New York Times op-ed. Particularly tiresome were the “What did you expect? You were playing with the big boys” reactions borne of equal parts chest-thumping self-congratulation (“only some of us really know its a war out here”) and a sense of betrayal (“don’t shit where you eat”).

Binary interpretations are most digestible in the media and the fact that no one’s motivations are unconflicted, least of all Mr. Smith’s apparently, was tossed aside as a matter of convenience.  There are, I suppose, a small group of professionals who head to work each morning 100% convinced in the validity of what they do and the commensurate compensation that results. The rest of us mortals consistently measure the balance between the cost of employment – in terms of time, family stress, the shit-eating from senior psychopaths – and the financial and social-related rewards.

Finance as an industry is different from most in its aspirational qualities – few people grow up dreaming of managing a slaughterhouse but tens thousands diligently hit the books dreaming of becoming the next Steve Cohen. Those successful at reaching a major trading floor or investment banking department usually spend the first week in awe of their surroundings, one assumes with a feeling similar to the first time a freshman football player runs out of the tunnel on game day in front of 100,000 screaming fans.  It is, or was for me at least, the realization of a dream.

When you bust your ass to achieve something it is extremely difficult not to become fully invested in the mythology that drove you there. Disillusion takes time. In the first couple of years, when the veterans make sidelong cynical comments you sneer back and classify them as bitter old men on their way out. Furthermore, you’re a peon and the worst of the conflicts are hidden from you.

As with any field, with experience the view changes.  You take notes in meetings where the sole agenda is how to hide fees from clients, the Head of Retail decrees caveat emptor on triple dip broker strategies stuffing fee-based accounts with products with huge initial commissions. The trade desk openly front-runs big retail orders and this is carefully steered from regulatory view. The negative side of the motivation ledger begins to get filled out but still, on balance you are doing the work you want to do.

In cases where the money climbs in near-perfect inverse correlation with disaffection, this makes things more difficult still. New house, new Merc, new spouse, private school for the kids are all within a responsible budget at current salary levels. Not if you change industries though – there just aren’t that many options where $500K is worst case scenario. This is particularly true if the primary skill set is predicting asset prices in a largely virtual world.

It would be stupid to suggest that the above scenario covers everybody in finance. There is no shortage of satisfied professionals in the industry who correctly assume that they provide an honest, highly difficult and intellectually challenging service in the support of clients and the economy at large. It does seem, however, to cover the experience of Mr. Smith and to some extent my own (although my reasons for quitting the previous position were much different than his). I would argue furthermore that this arc – initial wonderment and satisfaction steadily eroded by cumulative disgust  – is extremely common among financial professionals. Most current employees have been fortunate enough to find a position where the visible self-serving skullduggery of their employers remains at low levels acceptable to them. A minority are greedy scumbags who don’t care.  But there are a number, larger than outsiders might think, who feel like Greg Smith likely did last year, trapped by circumstance in an environment markedly different form the one they expected. And, for the courage to jump off the bandwagon while accepting the self-immolation of his career, and for publicly doing what he felt was the right thing (misguided or not), I give him credit. Good luck to him.

Interloper: End of Chapter One

True to the pervasive obsessiveness of financial industry employees, I wrote a list of topics to cover with Interloper at the outset. This list, which was surprisingly unchanged as the months progressed, has now been covered.  Alarmingly, as a result of this, the last posts began to exhibit the two temptations that, in the beginning, I swore I would never succumb to – beating on near-dead rhetorical horses (the industry in playing on your imperfect psychology) and attempting to wring pearls of wisdom out of the work of others (notably Epicurean Dealmaker for some reason).

The urge to write combined with a lack of anything new to say is a time-honored recipe for masturbatory crap, so its definitely time for a hiatus. There are also practical reasons for this – I still need to find employment to take some pressure off Mrs. Interloper, who desperately needs a vacation.  Writing blog posts and hitting F5 every 90 seconds is not conducive to a sustained effort in that regard.

At the risk of going all Altucher on the people nice enough to read this, I want to also explicate a strange emotional risk that also informs the decision to take a few weeks off from blogging. I couldn’t, first of all, be happier with the way things turned out for Interloper and the five-or-so people most deserving of gratitude for this know who they are. Having readers focus on your opinions, and occasionally agree with them, has been incredibly rewarding. At the same time it also gives birth, for me at least, to an unhealthy ambition for further recognition – what was an initial, highly gratifying surprise morphs into a weird existential need. Twice during the past two weeks (and this is truly embarrassing) I’ve been on the verge of picking a fight with another blogger only to discover, with a modicum of introspection, that the root cause for the impulse was a desire for attention. Acting on this would have disqualified me from ever calling out anyone else’s behavior as infantile which, as it happens, is one of my favorite things in life.

End of therapy session. I’m not done; I just need time to make a new list. Hopefully the few very nice emailers asking what was up with the lack of writing now have some idea.

To end Interloper: chapter 1, I’ve re-framed the issues covered to date into three broad industry/investing tenets as follows:

Cui bono: Whenever you’re confused about anything involving the finance industry, look to how it benefits the investment banking department. If, for example, analysts from three large BDs all raise ratings and targets on the same stock that hasn’t moved in 5 years, first assess the potential for an M&A transaction or secondary offering.

Don’t trust your gut: The industry knows your brain better than you do, how to appeal to its less rational, emotional elements. Going with a gut feeling and winning is undoubtedly exhilarating and you’ll want to do it again. This is, however, the same thought process that built Vegas. The corollary is to be very careful when you see what you want, or expected to see. Try and practice thinking like other, successful investors with a different style, if only as a test drive.

The finance industry has its own interests, not yours, first: View every research report and every speaker on business television with the same skepticism you’d bring to Super Bowl commercials. This is not inherently cynical – good products need advertising almost as much as bad products. But don’t expect full disclosure.

 

 

 

End of chapter 1

The odds that you understand the economy better than POtUS are really, really low

The Internet has had innumerable salutary effects on society but one of its decidedly non-wondrous outgrowths is the bull market in half-baked, ill-informed snark. The Atlantic’s Megan McArdle detailed this beautifully over the weekend in if everyone Else is Such an idiot, How Come You’re Not Rich HERE, during which the author dismantles Forbes’ criticism of the coherent if ill-fated Netflix Qwickster strategy. Ms McArdle writes:

I don’t want to pick on [Forbes], particularly, because I’ve read some version of this lament about Netflix about a thousand times. And indeed, I completely agree that the Qwikster disaster was nothing short of debacletacular.

But how do we get from “that was a bad idea” to “Reed Hastings doesn’t understand what business he’s in?”  When Internet commentators see odd behavior that they don’t understand, why do they assume that the most parsimonious explanation is that management must be a bunch of drooling morons?

This tendency, to sit at a laptop and blamestorm without any type of detailed research, is the most destructive and lazy type of epidemic and politics is of course ground zero for the phenomenon. In terms of economic policy, a cursory examination of this morning’s media extends the accepted conclusion that both the Eurocrats and President Obama are the intellectual equivalent of drunken, “drooling morons.” Consider, though, how likely it is that you know more about the economic situation than they do. POTUS or Ms. Merkel have access to literally any information they need, including the attention of any global expert, (even professor Krugman at 3:00am if necessary, although I’d bet he’d be cranky) to respond to niggling questions. Add to this that the job security of said politicians is more dependent on economic factors than any other concern, it is a reasonable conclusion that to believe your comprehension of the situation is better than theirs is a colossal feat of arrogance.

To backtrack a couple thousand years, the general assumption regarding the fall of Rome is that the contemporary leadership was characterized by the same kind of ignorant as POTUS.  The historical record, however, clearly displays that the intelligentsia of the time was well aware of Rome’s failings, they just couldn’t figure out a way to fix them. Pointedly, the corruption of the Senate and political control by wealthy elite paved the way for the dissolution of democracy and the onset of empire.  They were not ignorant, contrary to popular belief, just overrun by socioeconomic trends too powerful to harness.

Returning to modernity, it is clear from McArdle’s post that Netflix CEO Reed Hastings was, with the spin-off strategy, attempting to address very real structural issues within his firm. The plan clearly ended up as an online Bay of Pigs, but the drivers behind it are completely explicable with a modicum of research. I would argue that the behavior of politicians is similarly intelligible, with electoral money-raising, pandering to constituents and poll-watching replacing rising digital streaming rights as major motivational culprits.

Labeling corporate or political celebrities “idiots” is to some extent to self-identify as part of the problem. Getting rid of these “idiots” will solve nothing, except to provide new vessels for sneering, self-congratulatory scorn. Focusing on the forces that makes these people appear to be morons, and widely publicizing these drivers to the point where they enter the general consciousness, actually provides an avenue for progress.

Michael Jordan, Steve Jobs and other socially beneficial psychopaths

I have a lot of time for The Atlantic’s online property and it was no surprise to see the recent announcement that the company now generates more revenue from online content than print.  The genius of the strategy was to focus on quality thinkers who, through their own contradictory personalities, were less inclined to spin off into dogma. Andrew Sullivan, now departed to The Daily Beast but previously a central component to The Atlantic’s success, is a staunchly Catholic, staunchly conservative, HIV-positive gay man and Megan McCardle is a libertarian feminist who probably cringes at the “world’s tallest female blogger” title. Newer member Daniel Indiviglio remains essential reading.

After an endorsement like that you are probably expecting an attempted smackdown at this point but that is not exactly the case. I actually liked Tom McNichols’ Be a Jerk: The Worst Business Lesson from the Steve Jobs Biography and the central point, that those already inclined will use the bio as an excuse to extend their assholery, I accept entirely. There was though, something that bothered me about the piece and initially I couldn’t put my finger on it.

The article ends thusly:

 

The fact is, Steve Jobs didn’t succeed because he was an asshole. He succeeded because he was Steve Jobs. He had an uncanny sixth sense about what consumers wanted, an unmatched ability to adapt existing technology and turn it into something new, and a commitment to quality that turned ordinary Apple customers into fans for life. Being an asshole was part of the Steve package, but it wasn’t essential to his success. But that’s not a message most of the assholes in the corner offices want to hear.

 

And therein lies my problem. There is little doubt, based on personal experience, that being an asshole was an essential component to Jobs’ success and, not only that, denying this fact represents a dangerous from of faux egalitarianism.

The first thing that must be kept in mind was that Steve Jobs was not just a member of the 1%. He was, like Michael Jordan or William Faulkner, in the top 1% of the 1% or, in other words, not a normal person or “Child of God like any other” at all. We are talking about a group of people for whom being born with at least one transcendent talent is a necessary but not sufficient condition. They also develop a degree of obsessiveness about honing their skills that at best borders on mental illness and usually goes beyond. For those rare people willing to look under the hood of fandom, the unifying characteristic of this group is an almost complete inability to form relationships with normal, healthy people. Society usually negotiates a de facto contract with heroes like this, accepting (and ignoring) the dark sides – the vicious competitiveness, the rampant alcoholism, the assholery – in return for the benefits, whether they be works of art, championship rings or iPads. The need to closely identify with members of this club is understandably aspirational, but also contains a healthy dose of wishful, delusional thinking.

In a corporate sense, it is not enough to have one leader, no matter how talented or charismatic. It is also necessary to attract other uber-talented people but even more importantly, a leader like Jobs must drag all of his employees into his obsessive, driven world at least to some extent. You do not do this with Montessori, self-actualization based techniques or with monetary incentives. You do it with fear – fear of being fired, excluded, publicly belittled or not living up to your own self-image. Greatness rarely, if ever arises from comfort, happiness and complacency and by all accounts, Apple achieved greatness through its CEO’s ability to extend his ruthless, obsessive, unsettled, perfectionist nature into every corner of the company.  By being a asshole.

It is true, as McNichol illustrates, that many hundreds of idiot managers with little hint as to the true extent of Jobs’ abilities will copy his affectations to the detriment of their staff and society at large. But Jobs, like Jordan and Faulkner before him, are not examples to be followed or even really to be fully understood. To attempt to do so is largely a conceit, an attempt to glean their advantages without the internal misery, single-mindedness and self-exclusion from normal life that the development of their talents required.

Real media training, bull riding and pet lions

There was a time in the late 1990s, early 00s when I was quoted in the print media a lot.  In the early stages, diligent bureaucrats that they were, the company demanded I take a full day of media training and a more pointless exercise I have rarely undertaken, The emphasis on obfuscation and ending each comment with a restatement of corporate initiatives was by and large an exercise in “How to ensure a Reporter Never Calls You Again Under Any Circumstances”.  There is, in the end,  only one real rule about dealing with media, as immutable as death and taxes : never say anything negative about any specific person or entity.  I was about to have this demonstrated in no uncertain terms.

At some point in 1998 I got a typical call from the media asking for comments on the relative performance of different investment styles. My comment at the time was, I thought, pretty innocuous. I indicated that sector rotator managers (in the parlance of the time), having positioned for a conventional late cycle rally in commodities, were blindsided by the Asian/LTCM crises. I actually said “sector rotators like Mr. X”, carefully choosing a no-load fund manager. I worked for a full service brokerage and our brokers would not sell a no-load fund at knifepoint, so I thought I was good. I hung up the phone and went about my business for the rest of the day.

The next morning, the story is printed and for reasons I still don’t fully understand, the reporter had added “Mr. Y and Mrs. Z” to my comments when I had never mentioned them. And here’s the important part – combined, Mr. X, Mr. Y and Mrs. Z composed three of the top five institutional commission generators and Mr. X in particular had called early in the morning and demanded my head on a plate.  Upper management, peon that i was at the time, was only happy to oblige.

Thankfully, this was a rare period where I did not physically sit on the trading floor (they would have walked over and fired me immediately) and got enough warning to escape the building before they could find me. Things resumed as normal, except for the anxiety, the next day when everyone calmed down.

This, I realized, was real media training.  Like a complete moron, I assumed that the media was merely an unwitting pawn, the free marketing wing of my plan to take over the world.  After the incident, I realized I was never in control of anything at all and that my position in the whole process was much more akin to a professional bull rider, with the media as bull.  Sure, I could benefit from the media, but could also get tossed on my head and stomped through little fault of my own.

The bull rider metaphor has interesting applications to investors’ current experience with the market.  Up until the GFC, the general feeling was that the market was a benign, even helpful force, automatically creating future wealth. Post-GFC, the average investor views the market like a pet lion owner in a small condo, or like a penitent to a bi-polar god from Greek mythology.

Longer term, there are benefits to this newfound respect for risk, and recent volatility can be seen as instructive and not just penance for the Great Moderation illusion.  The market, like the media in my example, has its own agenda and was never our friend. Thoughtlessly tossing money at it with the expectation of future wealth was, in hindsight, merely another sign of overall cultural complacency. The punishment may not be commensurate with the crime, but if the gut-wrenching volatility of the past three years results in more financial diligence, then that at least something positive has occurred.

Investors would, I think, benefit from thinking more like a bull rider in the current environment. Recognizing that, while opportunities are available, the bull/market has the upper hand and that the possibility of being blindsided at any time forms a helpful reminder regarding portfolio risk.

How business media can stop hurting America

Jon Stewart is an exceedingly bright and funny man, but is surrounded by this vague, uneasy aura of hypocrisy by allowing convenience to determine when he’s “just a comedian” or “the voice of Gen Y”.  The pervasive irony, the “isn’t this crazy?” exasperation is in the end defeatist, laughter in the face of helplessness. Stewart is today, however, an unavoidable touchstone because I feel compelled to go there in stating, “Business media, you are hurting America”.

There are parts of the problem I get – for CNBC the Nielsen ratings system does not include viewers at the office, a constituency that forms the majority of the business media audience. This leads to understandable challenges in terms of selling ad space, which in turn results in various formerly-bionic actors selling mattresses and discount electronics to stuff in our orifices during breaks. Responding to this by loudly spouting misleading rhetoric and outright falsehood, however, is not acceptable. To state again and again that because Fannie and Freddy contributed to the GFC that they were a primary cause, and the banking system was largely innocent, is patently false.  To state again and again that because tax increases would not be good economic policy at this point, that this automatically means that fiscal spending should also be prevented at all costs, is similarly destructive. Given the overwhelming body of evidence rejecting these claims, the only two possible reasons for arguing them are dishonesty or intellectual immaturity, and we’re all tired of immaturity representing our upside.

I’m not picking sides here, OWS is little better – screaming about “social justice” from atop their soapboxes as if we haven’t been arguing about the meaning of the term since Plato. Claiming to be on the side of social justice is an unarguable, theological statement little different and no more helpful than Tim Tebow thanking Jesus for helping him get the ball into the end zone, just another declaration of team allegiance.

When faced with opposition, children scream louder while adults, in recognition of their own fallibility and a degree of empathy for fellow citizens, compromise. In order for this to have any chance to occur, we need first a clear statement of facts not organized into rhetorical argument and here is where a Utopian business network has a major leadership role to play.

Details kill dogma, as the late Senator Moynihan used to point out effectively with “you are entitled to your own opinions, but you are not entitled to your own facts”.  When explaining BAC, for instance, instead of having an 0-for-’11 analyst talk about the horrors of regulation, amorphous “earnings power” and “technical support at $5”, there should be an expert without an axe to grind to go through the BAC’s balance sheet so investors can better understand why the stock is trading at ½ book value. Any number of experts are capable of detailing the importance of shadow banking exposure in Europe if given five minute to speak uninterrupted by the term “dumb Socialists”. There are literally hundreds of examples like this – the relationship between gold prices and negative real interest rates is another, where even most professional investors require more detail. There is also no shortage of available, unbiased sources to provide it – Pettis on China, Simon Johnson on Europe, Tyler Cowen on pretty much anything.  We need to hear, in other words, what’s happening and why, we don’t care how it fits into your political worldview.

It is simply not necessary that the increasing complexity of global finance be inversely correlated to the sophistication of news coverage, even of the temptation to simplify increases. Instead of pandering to existing beliefs and biases, business media has to start feeding the near insatiable appetite for deeper understanding of a rapidly changing, and yes, moderately less American, world. Otherwise they will continue to be part of the problem.

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