Maven: Some Gambling on Politics

Democrats vs. business, Congress' surprise betting ban and some barking mad ideas.
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It has been an oft-mentioned item in the news recently that a Democratic takeover of one of the houses of Congress would be bad news for the stock market and business in general.

The Business Press Maven is not so sure the Democrats will run the table -- once again, they had a good August, but never defined an alternative and the economy is good.

But if they do win control or at least enough to temper Republican control, The Business Press Maven, who holds dear the belief that nothing is better for business than governmental gridlock, thinks that the stock market ultimately would benefit.

For those who disagree, let me draw your attention this morning to the plunging prices of online gambling stocks, sent into a tailspin by

Congress' surprise passage

of what may amount to a complete online gambling ban in America.

Another oft-mentioned, off-base item in the news is the fear of what outsourcing can do to jobs in America, without any acknowledgement that there are real limits to outsourcing.

Anyone who is at all familiar with

Reuters'

experiments with overseas writers knows that, well, many of these Far East writers do about as good a job as The Business Press Maven would writing in Swahili.

And can anyone look at

Dell's

(DELL) - Get Report

consumer service problems without wondering whether this panic-mode train of thought about outsourcing shouldn't be balanced by the fact that language differences and distances still matter when it comes to quality.

If you don't believe me,

read

exactly what I'm thinking, as written by

Forbes

.

The Business Press Maven has always thrown accolades at companies that operate in growing business segments in which people buy on emotion.

But I've stayed clear of pet superstores because though people are barking mad for their pets and unthinkingly empty their wallets to secure an animal companion's happiness, I was always concerned about the lower profit margins for a lot of the stores' products.

That's why a

Barron's

story

caught my eye.

PetSmarts's

(PETM)

doggie hotel business -- the company now boards dogs -- is rolling out better than expected and has done magical things to stores' profit margins.

Perhaps nothing turns The Business Press Maven into a ball of bad energy quicker than someone who says that a particular standard economic measure is no longer of any value.

Granted, I can't think of any particular statistic (save my own weight -- sweets tend to drop right to my hips) that I get too caught up in.

But as we sit here this morning with the stock market and economy at such an obvious crossroads, dismissing the validity of a standard economic statistic is just as big a mistake as fixating on any single one.

Yet all around us, business journalists push us to think of longstanding economic measures as obsolete. Ninety-nine percent of the time, you do so at your own peril.

Because I have neither the time nor the stomach, I'll just grab two recent examples to beat about the head.

Fortune

recently

told us

in a lead that: "Gross domestic product, the leading economic measurement, is outdated and misleading."

As you readers know, The Business Press Maven has his own issues (both psychological and with GDP numbers).

The former are between me and my psychopharmacologist, but in the case of the latter, the problem is the way these stats are first reported as if they'll stand the test of time, even thought they're usually revised. But to say it is outdated and misleading is dense, especially if you look at the reasoning in the story, and I use the term "reasoning" lightly.

Intangibles. From those who wanted to redefine terms like "earnings" during the Internet bubble (remember when EPS was supposed to be outdated, with terms like "eyeballs" in the vanguard?) to the ditch-the-GDP numnuts, the intellectual justification always boils down to a heavier weighting of intangibles.

That's a little like making the case for a heavier weighting of pixie dust.

The

Fortune

piece goes back two decades and to Papua, New Guinea, for a "prime example" of why we should factor in pixie dust -- excuse me, intangibles -- so let's not spend too much time there.

Just remember: Rely too heavily on GDP and you might get duped.

But listen to advice about how you should ignore it because it's outdated and you'll hamper your ability to gauge the economy -- unless you think that as Papua, New Guinea, goes, so goes the U.S.

And as the

Dow Jones Industrial Average

tiptoes around its record high, it has become fashionable to say that this surge doesn't matter.

Saying that a Dow record is of limited importance, of course, is not preposterous. Of the many measures of the stock market, some, like the

S&P 500

, might be more relevant.

In the end, what matters is how your stocks are performing.

But eager for provocative copy to be pegged to the Dow's new high, the business media are generally taking a small morsel of truth and running with it to the land of ridiculousness.

Take a business

column

from New Hampshire's

Nashua Telegraph

headlined "Is the Dow smoke and mirrors?"

Full disclosure: The column has a barb for "Mad Money," Jim Cramer's TV show, but the bulk of the column is spent on both Katie Couric and the claim that since the Dow is a small sample of the stock market, it's totally irrelevant.

But of course, the small sample is a

consistent

sample.

The Dow provides some long-term historical context in an industry that has little. And since the Dow has long been tracked and is easy to track, people pay attention.

That means its relevancy, while flawed to a degree, is also self-fulfilling.

The larger point is that about the only thing that should be thrown out is advice to throw out traditional economic measures. It's barking mad.

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.