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Mother Merrill's Never-Ending Goose Chase

The writedown mess underscores the danger of putting an end to a story before it's over.
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It's the story that won't end, but has been given a hundred endings, most recently about Merrill Lynch in The Wall Street Journal.

Remember way back when all this subprime mess started oozing to the surface in the middle of last year? Write-offs were taken and that, we were told, would be the end of story.

Then more write-offs came and that, we were told, would be the end of the story.

They Just Don't Get Bank Write-Offs!

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Fast forward to today: We have had several more write-offs that total up to about $90 billion combined, and what do we get yesterday from

The Wall Street Journal

? A theory that Mother Merrill might be done with write-offs. Look at the classic way it's declared: "If the current estimates are correct, Merrill has relatively little pain left."

Little pain left. End of story. But sit back and let the Business Press Maven pull back the curtain.

If the estimates are correct?

IF

is the basis for declaring an ending?

Well, sure, if bullish estimates about where Merrill stands and which way it's headed are correct, there will be little pain left.

But that's an if that can detonate your portfolio, and it's an if that's been the problem all along. Who can make estimates, let alone bullish ones, for companies like these financials that were pricing securities to market -- which puts investors on a bridge to nowhere?

And believing the most bullish of these estimates was a leap of faith ... off this bridge to nowhere.

So why the constant declarations of an ending? It has to do with human nature and the nature of journalism.

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Human nature craves ending because life has ends. Even in story writing, little children instinctively sum up with a "The End." And the little children don't mature when they become adult journalists, which is why we get a million endings to chaotic situations, be they the early Presidential primaries or the financial future of banks teeming with bad loans.

Again: Many situations have clear endings. But chaos almost never does.

So when journalists, out to impress and write a concise little story that can be summed up in headlines, enter chaos, they often emerge with a tidy ending. They don't end with: Who knows? Or: To be continued.

In some areas, this doesn't hurt. But in politics it can confuse and in business it can lose investors money. So if, in business, you are reading about a chaotic situation, do yourself and your friendly neighborhood Business Press Maven a favor.

When you see a pat, little ending, ignore it, and then go back. You'll see forced intellectual contortions beforehand, designed to get you there. In the case of

The Wall Street Journal

and Merrill, it was the line about how if the estimates are right, the write-offs are over.

These write-offs will end. But I won't believe it until I see it. Problem is: Before we see the ending, we'll read about it 100 times. Beware and be aware.

While we are on the subject of headlines, you should know that sometimes very little thought is put into them. Stumble onto a catchy phrase, and the heck with meaning. Look at this one, about Merrill -- from

Forbes

. It was later changed, but if something like this seeps its way into a headline, you can imagine how much misinformation gets in too: "Merrill Lynched by Subprime."

Remember that Merrill's former CEO, Stanley O'Neal, is black. And this is the very same week that brought controversy to the Golf Channel, which made cracks on a telecast about Tiger Woods being lynched. Mine is not a column that critiques the media for good manners or inherent decency. But just use this as an example for how poorly reviewed headlines are before going public. And keep that in mind when the issue is investment performance. Read past the headline.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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