After the stock market's calamitous drop Tuesday -- if one can define a calamity as something that still leaves you a rock-skip from your all-time high -- the business media are making strident statements about what's to come, even as they express puzzlement about exactly what happened.
Let's wrap a safety line around a tree, loop it around our waists and wade into the muck. But first, here's a bracingly insightful thought.
Many a puzzled blink has been about how the market's decline accelerated sharply as the afternoon wore on. Computerized trading (how come no one blames computers for good days?), a technological glitch in how the
is calculated and perhaps the waxing gibbous moon all probably played a role.
However, although I've read like the dickens this morning, I haven't found anyone blaming the media. I don't mean in the common way, where the media are pinned with blame for everything under that moon, right down to the Lindbergh kidnapping.
Look, this was essentially a test case: our most sizable worldwide decline during a time when instant analysis is the tool-in-trade of the business media and rules the market.
How the Headlines Played Out
By about noon, a big down day -- which not too long ago would've had to last into the afternoon to qualify as news and, even then, would've been spoken about in the next day's newspaper with some restraint or at least a full day's perspective -- is already a national story of
The Internet teems with instant analysis. Cable television, for its part, goes into absurd overdrive mode. It's like Anna Nicole Smith dying, only with your portfolio instead of your heart taking the hit. By the end of the day, we're left with an amplified version of what was needed: a good short-term correction.
Did you say short-term correction?
The Wall Street Journal
, on its front page, will have none of it. The lead of this morning's
page one story lays down the prospect that a single day's trading indicates nothing less than that the entire public is redefining its entire view of the whole concept of risk.
Uh, the patient coughed. Send for the undertaker.
Here's what Dr. Journal led with: "Yesterday's plunge in stock prices around the world, including the steepest percentage decline in the Dow Jones Industrial Average in nearly four years, signals that investors may finally be re-evaluating their insatiable appetite for risky investments."
Can one day's activity signal a shift in anything, except time? The irony, of course, is that in the environment of such a supposedly insatiable appetite for risk, no one was willing to go near a newspaper stock with a 10-foot pole. Anyhow, the whole economy is not like a newspaper newsroom. There is some hope.
contorted itself into a ridiculous little knot, trying to explain what happened. The piece opened with a thought that seemed close to the diagnosis from Dr. Journal: "When did the much-expected wave of risk aversion of 2007 finally break?"
Again with that instant emergence of the era of risk aversion. It's interesting, The Business Press Maven wants to point out with a daring display of common sense, how this newly minted generation of risk-averse investors was, by the end of the day yesterday, buying against this onslaught of selling.
Seems pretty risky to me, but what does The Business Press Maven know about being gutsy?
By the end of that same article, the
throws its hands in the air as to why it all happened by hiding behind an old trader's aphorism: "When the markets go down, the only thing that goes up is correlation."
And that verbal shrug was with a full day to think the events over. Maybe instant coverage ain't so bad, huh?
Anyhow, let's move on to a different topic.
The China Factor
The Business Press Maven would not have to get into such persnickety little states if the business media would just stop making the same mistakes twice. But wishing only wounds the heart, so I'll stop.
That brings us to the lucky run of the big equipment makers. Granted, both
have, historically speaking, been good operations. But in recent years, the planets have aligned correctly for them, including strong overseas demand from places like China.
The Business Press Maven has, in the past,
smacked the business media around for portraying Deere's clearly competent CEO Robert Lane as Isaac Newton in a corner office. He is not a genius, but a decent manager in the saddle of good wider trends.
Caterpillar, in a similar macro environment, has not done quite as well, so when
The Wall Street Journal
interviewed CEO Jim Owens on Monday, I expected a tougher approach. Of course, expectations only wound the heart.
Never mind the final question of the Q&A, asking Oracle Owens who was going to win the NCAA basketball tournament. He loves basketball! What a regular guy! But what about the more substantive softball question, like about what countries were best to do business in or what the "buzz" was at the Business Council meeting? "It is always about the economy," Owens answered, making his NCAA winner answer -- Florida -- more specific.
Now what would the appropriate question have been -- the obvious question to any stock picker and one that would have made the journalist seem prescient considering the stock market's Calamity Tuesday? Here it is:
"You guys have really benefited from the larger trend of China's growth. What happens to you if it stumbles? Any plans?"
Alas, that question was not asked. But, in fairness, I do think Owens was right on Florida.
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.