NEW YORK (TheStreet) -- Watching the excellent Springsteen And I documentary the other night reminded me of that epic line from Bruce: Blind faith in your leaders, or in anything, will get you killed.
A tad melodramatic, no doubt, but equally as powerful and relevant as long as you keep some perspective.
That bit of wisdom from The Boss could have been the headline for my critically-acclaimed, if it were a TV show it would've won an Emmy even though the ratings sucked Tuesday article: Netflix Singlehandedly Sucking the Life Out of Journalism.
Because it really does apply, particularly if you're an investor, but also if you're one of the millions of people who follow and/or subscribe to Netflix (NFLX).I can only chalk up what we see with Netflix, day-after-day on Wall Street and in the media, to blind faith. Many of the same people who kept faith in NFLX during the summer of 2011, as the stock magic carpet rode to $304, are singing the same song two years later. I'm simply here to tell you to be careful if you own the stock. Proceed with caution. On the bright side, it has had such an amazing run that, for many shareholders, even an all-out implosion wouldn't hurt that much. Sure, you would see profits trimmed, but you wouldn't necessarily blow up your account. That, however, comes from the same strand of thought that kept people not only in Apple (AAPL), but buying more and more around $700. Don't let the dual psychological forces of pledging loyalty to a battleground stock and having blind faith in Netflix's leader get you killed. If you review some of Reed Hastings and other Netflix executives' comments from this week's conference call (you can see a few in the above-linked article), you discover that Hastings has this way of concurrently telling everybody only what he thinks they need to know and putting them at ease. That's what he does when he says Listen, I'm the CEO and I don't look at churn (I call bull on that, by the way), so there's no reason for anybody else to look at it. Or when he blows off lower-than-expected net subscriber additions to seasonality or says hey, we came in at the midpoint of our internal expectations so it's all good and everybody eats it up. Nobody pushes the obvious hard enough: If there is all of this interest in Netflix original programming -- these things we're calling "hit shows" -- then why this mild disappointment on sub numbers? Are so many existing subscribers watching it that new ones do not matter? Are the people who churned out being replaced by others who are signing up exclusively to see the originals? Wait!. You won't provide specifics on any of this. As such we can't answer these questions sufficiently. So how in the hell can we buy or recommend the stock without a disclaimer or tout Netflix as the next Dylan or Wayne Gretzky? Wait! We can't, but we do. And we do it on blind faith. I have stated how I feel about Netflix and the reasons why many times. This is not about that. It's about asking questions, being curious and not filtering out information that doesn't fit your thesis, hopes, desires or what Reed Hastings tells you you should believe. A guy who co-contributes to a blog about media, applied statistics, higher education and epidemiology -- West Coast Stat Views -- wrote probably the nicest thing anybody has ever written about me:
He has that increasingly rare facility of recognizing the obvious when the obvious does not match the official narrative. He questions the rather odd numbers coming out of Netflix ... He understands the importance of not putting too much weight on absolute numbers when looking at the Internet and instead take things in context ...
I suspect this independence comes in large part because Pendola has a very different background then most of the people who write financial news. One of the big recurring themes at West Coast Stat Views is just how insular and inbred the journalistic community has become. This is if anything a bigger problem for financial journalists. A majority of the voices you read in Forbes or Business Insider or Bloomberg have basically the same background, were educated at the same very small set of schools, have had similar career tracks, live In the same region (and often in the same neighborhoods), read the same publications, and frequently have a common social circle.
The result is a monoculture and just as having fields upon fields of the same species of corn makes it prone to outbreaks of blight, having a journalistic community made up of remarkably similar people makes it vulnerable to bad narratives and questionable memes.Never met the author, but with gay marriage now legal in California, I might propose. In all seriousness, though, I have no interest in writing to make my colleagues at TheStreet or other media organizations happy. If I did, I would be doing a disservice to the people who read my stuff. And, subsequently, doing a disservice to my colleagues. We don't write or appear on TV or whatever for one another; we do it for the reader and the viewer. That's what sets somebody like Jim Cramer apart from his competitors. He knows how to beat to his own drum. As a result, he's wildly successfully and often misunderstood. (That's a powerful combination!). And, whether I agree with him on a specific company or not (e.g., NFLX), I understand, respect and learn from his approach every single day. Each daily must-read or must-see for me has that characteristic of having the guts to ask what the others do not ask without the fear of irritating his or her peers. That's fast becoming a lost quality as the blogger, cited above, who got it wrong on Cramer unfortunately, pointed out. On Netflix -- and on more important issues (and less important ones) -- journalists need to start acting more like inquisitive academics. That is the primary takeaway from my stint in graduate school. You can effectively blend an academic approach with the compelling, provocative and outrageous. Not only will it help you stand out from the "monocultural" crowd, it will enhance all aspects of your life. This flies for journalists, but anybody else thinking in the world -- the "smart generalist" consumer and critic of information, shall we say -- who goes beyond the lines people like Reed Hastings and politicians and the media feed them everyday. So be careful on NFLX and don't have blind faith in your leaders. Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.
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