Is The Stock Market Any Different Than The Subprime Mess And Warren Buffet Swimming Naked
Television prognosticators have been rolling out the parrots for their opinions on the "news" of the moment. Most are the same who have been yammering all along about the unstoppable global economy. I personally haven't seen any who has effectively articulated what is happening beyond the obvious subprime meltdown. Oh, believe me, they are out there. But, most aren't going to participate in the three ring circus on the game show channel.
That brings me to a suggestion. If financial TV businesses are really serious about helping investors, why not keep a data repository of guests, their positions on markets and a rating system? That would erase 90% of the guests and likely as many journalists based on their historical accuracy and bias. Especially in 2000. The fact that homebuilder CEOs, then hedge fund managers and finally private equity managers have been paraded across financial television with deference and hero worship has surely been a sign of impending doom to all three just as the same idiocy foretold the doom of technology stocks in 2000. I would put forth my opinion that all three guest lists felt nearly invincible by the time they were given such treatment and most don't see the train coming down the tracks.
A television guest rating system would also allow viewers to really learn from the 10% who have something worth listening to. I really doubt anyone learned anything from home builder CEOs who were cashing out options and personal stock sales at record rates while telling us business was great. A rating system might even lend credibility to these stations and encourage brilliant minds to be guests. That would further reinforce their position with investors and lead to even higher television ratings. Of course, that isn't going to happen for a few reasons. First and foremost is television advertising revenue drives decisions. Who wants to advertise on a channel that tells it like it is? "Well, private equity is a bubble, let's go to our TV sponsors." Are you kidding? Advertisers supporting a reality-based view which might be dour at times? That is the world's biggest paradox. In addition, many of today's guests are part of an industry that pays the majority of the advertising revenue for many channels: the financial industry. An honest evaluation of the economy would cause potential investors to hesitate in committing new capital to the very advertisers the networks rely on to stay in business. What advertiser would embrace that? Without the constant flow of new capital there are no large management fees, ski chalets in Colorado or yachts in the Caribbean. No, the reality is advertising revenue is much more important than actually presenting useful information. This isn't just an issue with financial journalism but all television journalism. Where did the all of the great television journalists go? To journalism heaven when business people figured out how much money they could make by transforming news into news bite paparazzi. How many stories are dropped or never reported because of concerns over lost ad revenue or something similar? That is why the internet is so powerful and why all people across the globe should ensure it remains a bastion of unregulated free speech and free thought.
Immediately, upon the market falling the TV personalities and guests all start yammering about a particular point-based concern: first it was housing, then the carry trade and now it is subprime mortgages. The discussion point on every topic seems to be "can it be contained" and the consensus is surely so. If the only problem the global economy faced was subprime, we'd work our way through it with comparatively minimal impact. Not that it wouldn't be an economic drag. That isn't even close to being the problem.
The problem with Wall Street and sound bite journalism is that they see only what is obvious so that is what they focus on. By concentrating on what they see, they are always looking in the rear view mirror and unable to see what is really happening. And I would argue they create a lemming mentality by doing so. As an aside, I actually heard the word lemming used to describe those selling off the global markets. Talk about those living in glass houses throwing stones........That is disingenuous, trite and churlish. So, what did that make everyone on Wall Street when they were shoving assets into the stratosphere? Thank you for that bit of brilliant, insightful and unbiased journalism.
Now that the tide is rolling out somewhat, how confident are you that the stock market has been going up for the right reasons? Especially since those shoving asset prices higher are now exposed to creating the messes we currently see. In other words, do you trust the equity markets were going higher based on fundamentals after seeing what Wall Street has created with the subprime fiasco? I have a question. Would someone care to tell me why the stock market is any different? Why it is not effectively another subprime-type mess created by the same market participants?
"Only when the tide rolls out do you discover who's been swimming naked."
-Warren Buffet
The reality? There are many swimming naked across the globe. That means you can expect to see the bad news spread globally over time. I think many will be surprised who else left their bathing suit at home.
That brings me to a suggestion. If financial TV businesses are really serious about helping investors, why not keep a data repository of guests, their positions on markets and a rating system? That would erase 90% of the guests and likely as many journalists based on their historical accuracy and bias. Especially in 2000. The fact that homebuilder CEOs, then hedge fund managers and finally private equity managers have been paraded across financial television with deference and hero worship has surely been a sign of impending doom to all three just as the same idiocy foretold the doom of technology stocks in 2000. I would put forth my opinion that all three guest lists felt nearly invincible by the time they were given such treatment and most don't see the train coming down the tracks.
A television guest rating system would also allow viewers to really learn from the 10% who have something worth listening to. I really doubt anyone learned anything from home builder CEOs who were cashing out options and personal stock sales at record rates while telling us business was great. A rating system might even lend credibility to these stations and encourage brilliant minds to be guests. That would further reinforce their position with investors and lead to even higher television ratings. Of course, that isn't going to happen for a few reasons. First and foremost is television advertising revenue drives decisions. Who wants to advertise on a channel that tells it like it is? "Well, private equity is a bubble, let's go to our TV sponsors." Are you kidding? Advertisers supporting a reality-based view which might be dour at times? That is the world's biggest paradox. In addition, many of today's guests are part of an industry that pays the majority of the advertising revenue for many channels: the financial industry. An honest evaluation of the economy would cause potential investors to hesitate in committing new capital to the very advertisers the networks rely on to stay in business. What advertiser would embrace that? Without the constant flow of new capital there are no large management fees, ski chalets in Colorado or yachts in the Caribbean. No, the reality is advertising revenue is much more important than actually presenting useful information. This isn't just an issue with financial journalism but all television journalism. Where did the all of the great television journalists go? To journalism heaven when business people figured out how much money they could make by transforming news into news bite paparazzi. How many stories are dropped or never reported because of concerns over lost ad revenue or something similar? That is why the internet is so powerful and why all people across the globe should ensure it remains a bastion of unregulated free speech and free thought.
Immediately, upon the market falling the TV personalities and guests all start yammering about a particular point-based concern: first it was housing, then the carry trade and now it is subprime mortgages. The discussion point on every topic seems to be "can it be contained" and the consensus is surely so. If the only problem the global economy faced was subprime, we'd work our way through it with comparatively minimal impact. Not that it wouldn't be an economic drag. That isn't even close to being the problem.
The problem with Wall Street and sound bite journalism is that they see only what is obvious so that is what they focus on. By concentrating on what they see, they are always looking in the rear view mirror and unable to see what is really happening. And I would argue they create a lemming mentality by doing so. As an aside, I actually heard the word lemming used to describe those selling off the global markets. Talk about those living in glass houses throwing stones........That is disingenuous, trite and churlish. So, what did that make everyone on Wall Street when they were shoving assets into the stratosphere? Thank you for that bit of brilliant, insightful and unbiased journalism.
Now that the tide is rolling out somewhat, how confident are you that the stock market has been going up for the right reasons? Especially since those shoving asset prices higher are now exposed to creating the messes we currently see. In other words, do you trust the equity markets were going higher based on fundamentals after seeing what Wall Street has created with the subprime fiasco? I have a question. Would someone care to tell me why the stock market is any different? Why it is not effectively another subprime-type mess created by the same market participants?
"Only when the tide rolls out do you discover who's been swimming naked."
-Warren Buffet
The reality? There are many swimming naked across the globe. That means you can expect to see the bad news spread globally over time. I think many will be surprised who else left their bathing suit at home.
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