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A Subdued Reaction to Dow's Finish

The business media seem to have left their party hats at home, a good sign.
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The Business Press Maven has achieved legendary status on Wall Street thanks to a modest number of guiding principles. In the Top 40 is this: For a potential high in one of the market indices to mean anything good for investors, the business media cannot be greeting it with flowers and chocolates.

In other words, broaching a potential new high in the

Dow Jones Industrial Average

should not be eliciting excited headlines. If it is, we're not going to hit a new high -- at least, not for quite some time. If the

headlines about flirting with a new high are relatively tame -- in fact, if they tend to use relatively modest words like "flirting" a lot -- well, we're set to make new highs in pretty short order.

If this sounds like the children's game of Opposite Day, guess what? That's the way to succeed in investing.

If you have learned anything from The Business Press Maven, it is that the business media provide a running commentary of conventional thought. Get caught up in it and you're in trouble. That's because conventional thought shifts, and investors don't want to be on the wrong side of it when it does. But tilt against it, and you will do well.

Last year, The Business Press Maven

was uncomfortable enough to demand that the business media get his misery over with and parboil him in a cauldron. That's because a piddling 19-point, or 0.2%, rise in the Dow that brought it over 12,000 was greeted by hyperbolic headlines about "home runs" and "once-skeptical investors rediscovering a passion for stocks."

But this morning, as the Dow stands poised to break its record closing high of 12,786 -- whether in a day or over the next few weeks -- headline writers appear appropriately medicated.

This is good news for investors.

The Wall Street Journal

is one of several media outlets to use coquettish imagery (me-ow), always a better indicator than hitting-it-out-of-park lingo. Its headline reads: "As Dow Flirts, Others Lead."

The subheadline plays it down even further, pointing to the comparative strength of others: "Foreign Stocks Outpace Blue Chips as Earnings, Weak Dollar Offer Boost."

Remember those breathless headlines about the 19-point move?

TheStreet Recommends

After the close yesterday,


used a headline to call a rally of nearly 53 points a mixed move. Holy redefining numbers, Batman. Said


: "Stocks end mixed ahead of key tech earnings." This was appropriate, as decliners outpaced advancers, but you can see how low-key conventional thought is, because in the subheadline of the same article is an excited thought waiting to come out: "Dow hits record territory as


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Johnson & Johnson

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top forecasts." Got that? Stocks ended mixed, but the Dow hit record territory?

Well, when it comes to talk about the Dow in the public square, it is a better sign for investors when business-media inconsistencies come in the form of understatement than overstatement.

In its lead,


uses the word "cautious" (good sign) and talks about the Dow "brushing" up against record highs. Like flirting, "brushing" -- not so great if it's happening to you on the subway -- is an appropriately measured term.

No grand slams here. Good sign.

And forget about being on the cusp.


is all like "no big deal" with this

headline: "Dow ends short of record on profits; IBM off late."

One exception to this measured approach came from

Drudge Report, which specializes in humorous and slightly overblown headlines. It went with: "STOCKS ROCK: DOW TOPS ALL-TIME CLOSING HIGH..."

But that Drudge headline linked to an

Associated Press

story that, again, was comfortably light on any overly excited nonsense. The headline there was a straightforward "Stocks Up on Inflation, Housing Data."


led with a

market story this morning where neither the headline nor the lead made mention of a new high.

The party hats, horns and honkers appear to be in dust balls. Just a month ago, the business media were ridiculously declaring the market dead, thanks to China and/or subprime -- a false and containable worry.

The upshot? With apologies to those keyboard monkeys, let's prepare ourselves for a new high.

Greater Fool Theory

While we're on the subject of journalists, markets and getting it wrong, let's review a Business Press Maven pearl of wisdom about the real estate market and the greater fool theory.

Every strong market is propped up by the business media making the spurious case that there will always be a new customer to buy whatever is rising beyond all reason. In real estate, the argument went, the influx of immigrants would provide constant demand. In this report from National Public Radio's "All Things Belabored," we saw this (false) and condescending theory in

full flower.

Immigrants are not stupid. When an economy slows, they stop coming. They certainly don't keep coming and keep buying homes. Anyhow, you can read the start of it

here. Immigrants, many of whom came to work in the booming real estate field, are getting hurt by the slowdown. You can fill in the future for yourself, none of it involving buying homes forever at any price. The greater fool is the one peddling such theories.

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, 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;

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to send him an email.