When it comes to opinions on Wall Street, The Business Press Maven has learned, and will now pontificate to the masses, there is clear evidence as to whether someone is a professional or an amateur.
The amateur assumes that anyone who disagrees with him about a company is speaking falsely. The professional has been around enough to know that different opinions are what make the market go round. They are, in fact, the collective salvation of a free system, and time always determines who is right. There is even danger to be had in being too wedded to your own opinion (marriage always costs), so it's not so bad to keep alive the thought somewhere in the dark recesses of your mind that the other side just might be right.
Which brings me to newspapers and Web sites. Disagreement on an issue within the pages of one paper -- or within the confines of a Web site -- can be productive. By coming at an issue -- say, Warren Buffett buying a railroad -- in two ways, the news outlet is making an addition to the wider exchange of ideas that turns all those thoughts and perceptions into defined stock prices. Was he a genius again, or was this a rare mistake?
In these sorts of cases, pretty cool stuff.
But these types of disagreements can also be something else entirely. Like when journalists are ascribing different reasons for small movements in the price of a stock, it can be pretty stark evidence of business journalists basically making it up as they go along.
In these sorts of cases, pretty crummy stuff.
So what should we start with, the cool or the crummy? It must be my naturally august and dignified sense of timing, but I say, dude, let's lead with the crummy.
The Business Press Maven frequently wants to drown himself in a tub of clarified butter every time he is forced to read the analysis of a 60-cent move in the price of a 50-buck stock. There are so many variables in the markets -- so many sellers, so many larger economic forces that nudge stocks a few dozen shekels this way and that -- that too many of these articles stand as great works of fiction.
Welcome to this past Thursday, which earned
The Wall Street Journal
The Business Press Maven's dreaded "Back of the Hand" award. On one page, C3, we had the thought expressed that
(Whoops. I mean Citi. They done lost their "Group.") went down a grand total of 60 cents -- 1.2% -- after the long-awaited job-cut announcement because what investors really wanted was higher revenue.
Said the C3 article: "After weeks of speculation, Citigroup unveiled a major cost-cutting plan that maps out savings through 2009 ... The cuts fall largely within expectations, but analysts and investors made it clear they want to see more from the world's largest financial institution as measured by market value. Shares of Citigroup were down 60 cents, or 1.2%, at $51.50 in 4 p.m. composite trading on the New York Stock Exchange."
The authors -- and headline writers -- had such a good bead on this yearning for revenue that even the subhead screamed: "Investors, Analysts Want Higher Rate of Revenue Growth."
Well, who doesn't? I'm just not sure that this longing was the root cause of the 60 cent drop. And I only say that because -- reading that same
Wall Street Journal
on the same day -- page C14
told me otherwise!
"So why did the stock yawn? Clearly, investors are skeptical Mr. Prince can deliver on his promises
of cuts." Also: "...investors have been lobbying for a more radical approach -- namely breaking Citi up into its constituent parts."
So, uh, the stock was down a modest 60 cents -- a rounding error, mind you -- because investors suddenly became obsessed with top-line growth over bottom-line savings? Or, uh, it was down that minor amount because investors rabidly wanted to blow the whole thing to smithereens?
Where is that tub of butter? Let's hope the lifeguard is off duty -- it's time for a swim.
Contrast that bit of false analysis with legitimately diverging views of the Warren Buffett/
The Wall Street Journal
The Financial Times
. In the
, James Stewart, always well informed and humorless, even amid the big vain personalities of business, says
that Buffet did well buying his choo-choo, in part because of increasing demand for corn to make ethanol. The Lex column, by contrast, says
that environmental concerns mean the business of coal lugging is going to (I apologize for this ahead of time) run off the tracks. (While this example involves two different news outlets, the well-thought-out arguments serve our idea of "adding to the conversation" rather than simply making noise.)
We don't have to go into the gory details of the Buffett disagreement. But we have, as you see, a legitimate one. Unlike the disagreement over, say, a stock price that nudged one way instead of another.
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.