If you learn one invaluable thing from the wit and wisdom of The Business Press Maven, let it be that the subtle shadings of words can carry as much influence on investment performance as more readily apparent numbers.
It is with this in mind that, as of this very moment, I would like to strike from the lexicon nicknames for public markets and companies like Mister Softie (nee
) and Mister Market (nee the U.S. stock market).
I am not normally one to lament the past, but our modern day culture of casualness holds some dangers for investors here. Years ago, when we did have nicknames, they were suitably dignified, like the imposing Big Blue (
) or the respectful Ma Bell (
Today? We get the Mouse House (
). "Put it on the list. Now cross it off!"
These nicknames are used quite often by media outlets and the risks, obvious and more subliminal, of infantilizing multibillion dollar companies in the public square are substantial. Chummy names make companies and markets appear more intimate, friendly and fun than they are.
Consider the jolly Mister Market. Like
Mister Met, he makes all stocks seem easily approachable, leaving no need for reverence or fear of what can happen if you are not prepared. As Met fans can attest, a big-headed mascot cannot protect you from pain and distress. So sure, Mister Market might seem to be all good fun, but to me it calls to mind Joe Pesci's great twisted refrain from
: "...I'm funny how? I mean, funny like I'm a clown, I amuse you? I make you laugh..."
The market is not funny and investors who want to make money, like fisherman considering the sea, must, at root, have reverence. That does not mean you can't laugh along the way, but here you have a nonfunny practice that only implies familiarity, breeding a casualness that can lead to a lack of caution and false sense of knowledge. Beware. And be aware.
Circling the RIMM
Onto more subtle shadings of words: The Business Press Maven's pretty little head is spinning seven ways until tomorrow on these
Research In Motion
headlines. Or is that seven ways until yesterday? Or, perhaps, seven ways more than was expected?
How did Research In Motion do in its second-quarter earnings reported yesterday? I tried to do the research, but my brain was merely put in endless motion.
Let's just take a quick look at some headlines and you'll see why, as always, it is essential that you read more than one article on any topic that is important to your portfolio's past, present or future.
The Wall Street Journal
, the most important item to be garnered from RIM's quarterly report was that it doubled its net and revenue from last year's second quarter. Said their headline:
Research In Motion Net, Revenue More Than Double.
, year-over-year comparisons weren't
bag. They were playing the expectations game:
RIM tops profit forecasts, predicts more strength. The most essential element to them was that RIM had exceeded expectations and set new ones.
method was to explain why, with the quarterly report seemingly positive, the stock came off in after-market trading. Said
High Bar Hits RIM.
In other words,
went the expectations route, too, but, unlike
, zeroed in on why the better-than-expected expectations caused a bit of trouble.
The nice morsel of news about RIM's raising expectations higher going forward? That comes not as a statement of fact in the headline, but with a slightly puzzled blink in the lead, a subtle disagreement with the movement of the stock.
This is nice to see, as too often coverage gets marching orders from the initial movement of the stock to the news, which is often a function of the whim of traders, that day's market mood or one big buyer or seller. In other words: It has little lasting value of the sort that should define numbers and hold much meaning. Said
: "Shares of BlackBerry maker Research In Motion (RIMM) dipped as the company failed to blow past analysts' expectations for the second quarter ... even as it guided higher for the current quarter."
Again, we speak a lot of the business media's hurtful habits, but no one was really wrong here. This just goes to show you how subtle shadings will get headlines looking in different directions and why any investor worth his or her salt has to rely on more than one article for guidance. In today's world, when you are not chained to any one paper, there's no excuse.
Speaking of excuses, you are a lousy excuse for an investor if you don't perform a Business Press Maven "Source Analysis" on any reports of takeover rumors. I've reviewed previously how high-profile reports about
Warren Buffett buying a big ol' chunk of
might as well have been read off a bathroom wall for all the value the sources held.
And how you could have avoided losing the money many did when chasing this published trash by "Source Analysis."
In the first, the report essentially gave you no clue of who the sources were. In the second: worse. You were told who the sources were and they were people who had been briefed on the talks, who could include anyone up to and including your great Aunt Matilda.
I bring all this up because we are going to set that nonsense against a
early Friday morning that
plans to bid for Simplex Investment Advisors. How do they know? "Sources familiar with the deal told
It's a slightly subtle shading, but "Source Analysis" tells me that the chance for this deal is based more in reality. Notice how "sources familiar" beats the MicroHoo talks, which were essentially unsourced. And they also beat the "people briefed," which, while not completely unsourced, is at a potentially dangerous remove. And each time removed from talks, you increase the chance for error or shenanigans.
Moreover, let's get to that key word: talks. In the Buffett nonsense, that's what we were hearing about: "talks." And anyone familiar with Wall Street knows that talks and a quarter won't buy you a pot to pee in. Everyone talks about everything, and most talk results in nothing. Here in this
piece, we are hearing actively about "the deal."
Not perfect, but I do trust that this might happen, while "Source Analysis" told me the other two were bad jokes.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;
to send him an email.