We have so much criticism to get to and so little time, so let's just get one minor bit of praise out of the way before it catches in our throat, chokes us and we -- and it -- fail to see the light of day.
Little hurts investors more long term than coverage that credits CEO brilliance for a company's success, when the company -- and, by extension, that lucky duck of a CEO -- is simply riding in the saddle of some good larger forces.
See, those larger forces have this way of turning at some point; those who invested in the brilliant CEO, who was depicted as being able to climb any mountain, ford any stream, are left with losses when that false god of a CEO ain't looking too bright anymore.
Case in point in 2006 was probably
. The Business Press Maven has no specific problem with Deere CEO Robert Lane. From all I can see, he's a decently good manager. But twice last year ( first in
July and again in
September), I had to flap my gums about coverage that was so over the top in praising Lane's innate brilliance that it would have been comical, if it hadn't set up investors for a fall -- when the dollar rises, China is not buying as much heavy equipment, the Bush administration does not funnel as much money to the farm states and corn-based ethanol is not as much a market fixation. These things could last, of course, but it is important to see Lane as more of a beneficiary than a cause.
That's why I want to give some shouts out to coverage of Deere's earnings this week. From
The Wall Street Journal
, which did not even mention Lane in its
coverage of the earnings (dudes -- I appreciate you listening, but that's going too far), to our own
, which referred to the company as a
"tractor shop," perceptions were kept in perspective.
Normally, trading on the misperceptions of the business media can be as easy as one, two ... and you don't even have to get to three. Three is a mystical number in journalism, central to an old newsroom canard that if it happens three times -- well, then it can be declared a trend.
Anyone trained in economics or science, or any other field that does not revolve around filling paper with as many words as you can in a limited amount time, might take obvious exception with the supposition that three can mark a real trend. But this we know for certain: If you see the business media reduced to using two occurrences as the basis for a trend, you know they are deep into Wrong Way Corrigan mode -- their default setting. Think the opposite, act the opposite and you'll be fine.
A prime example came late last year, when two straight months of existing-home sales clocked in at something less than a disaster, and countless headlines
screamed about a housing recovery.
New-home construction numbers for January came out this week, and if this is a recovery -- well, I'd hate to see what a bear market in housing looks like. I can spare you the gory details, but provided there are no children in the room, why don't I just lay them bare -- construction was down nearly 15% from December and over 37% from a year earlier.
The New York Times
, like most others,
blamed homebuilders and economists for the spread between the wishfullness of late last year and the reality of earlier this year:
"The new construction data contradicted the notion among some homebuilders and economists that the housing market has recently shown signs of bottoming out."
Of course, homebuilders are always going to say thing are peachy; and economists never agree on anything. It was journalists who were writing all those misleading stories and giving prominent display to all those headlines, based on two fluke months of business. Anyhow, next time save yourself the hassle of getting lulled into thinking the wrong thing; remember: Three is a joke benchmark to establish a pattern. But when it's two, you know the joke is going to be on you.
I'm going to hand out some poisoned candy this weekend in the form of condescending praise for saying something obvious that The Business Press Maven has been saying all along. So much written about presidential and congressional impact on the larger economy, but, in the final estimation, it all has one use for investors: to line the cages of their guinea pigs.
First, background. I have long
pontificated that investors looking to understand media coverage of the macro economy and gain a sense of its next move are well served to keep an eye on bias in the media. This does not, it might surprise some of you, come in the form of boosterism for any one political side. The bias is liberal, but can be seen more in the general thought that the president and Congress are capable of steering the economy this way or that.
A liberal faith in government assumes a certain degree of impact. But -- outside of the
chairman -- it's hard for any government official or body to have impact. And so we get endless headlines about what effect President Clinton's $50 billion stimulus package will have ... on a $30 trillion -- give or take a few nickels -- economy.
The truth is none, no more so than you would make a wave by skipping a rock into the ocean. Or make an economy soar or swoon (for that matter) with targeted tax cuts for the wealthier tier of the population.
These are mite little measures, at least compared with the enormous, increasingly international economy.
But here is the renegade thought, finally expressed by
The New York Times
in an article about how -- surprise, surprise -- headlines at this point in the economic cycle precisely mirror headlines at this point in the last economic cycle, during the 1990s: "What is striking," said the
"considering these similarities, is how little effect the policy choices of Democratic and Republican administrations seem to have had on how both growth cycles played out."
Uh, dudes, anyone who has looked at similarities in economic cycles under dissimilar political cycles already has a clue.
What is also striking, The Business Press Maven would like to add, is how the business media can get fooled repeatedly. And still not draw the proper conclusion.
article marvels at how both economic cycles were termed "jobless" and "joyless" by the business media several years in. At that exact moment, the jobs and joys started to hit up. Plain and simple, anyone who has run a business knows that employers are always nervous to hire early on. Employers feel secure several years into the cycle and -- presto -- begin to hire.
There is no such thing, ultimately, as a jobless or joyless recovery. Just as there's no shortage of joyless -- not to mention mindless -- business coverage.
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.