If it seems like I'm picking on Barron's -- well, I am.
I don't consider it sporting, in my hunt for poor work by the business media, to concentrate on the flaws and misleading thought structure of one particular publication; however, when that publication (yeah,
, I'm talking about you) continues to make the same mistakes on its cover stories, The Business Press Maven, and readers, must take notice.
Before getting to this weekend's cover, just be reminded that within that past few weeks
has tacked a couple of big calls: one that
and another concerning the
wholly transformed future of Wall Street
The only problem is that both of those stories lacked historical perspective, decent sample size and nearly everything else besides the ambition to make a big call. Making a big call is great. It can position investors well when the broader tide turns. But reaching too far for a big call -- which, admittedly, grabs readers' attention and sells papers -- can position investors on the precipice of a cliff.
Now on to this weekend's big call -- namely, that the housing industry is near the bottom and poised for a turnaround. That was quick, huh?
The headline lays out the thesis and is accompanied by an illustration depicting a roller coaster reaching the bottom of a big dip, with an almost equally steep climb ahead:
The article kicks off with a slightly vague anecdote about a t-shirt, then we get a summary of some of the recent carnage followed by the contention that "pessimism appears overdone." Fair enough, I guess, but the first person we then hear from is referenced in such a way that it would be comical if it were not so sad.
"Yes, the supply overhang still is humongous,"
allows before dropping this bomb on investors: "but at least the numbers are moving in the right direction, as even Treasury Secretary Henry Paulson noted last week."
Treasury Secretary Henry Paulson noted? Uh, hate to tell you,
, but Paulson is a Bush administration official. He is hardly a disinterested observer, much less in an election year wherein Republicans appear poised to take a beat-down in large part over the economy. It is no surprise that he would be predicting the housing market's recovery. As
he allowed? You expected impending doom? Yikes.
was not done with its unqualified surprise at Paulson's contention that the housing market was moving in the right direction, nor his qualification as the very first person to turn to for a quote on the direction of the all-important housing market:
"Speaking at a Federal Deposit Insurance Corp. conference,"
continued, "Paulson declared that 'we are well into the adjustment process.'"
Ah, I see. It wasn't even a down market -- it was an adjustment process. This biased source and King of Euphemism is the first one
turns to for a qualified take? Holy intellectual shell game.
Still, anyone can make a mistake. Let's look at
first choice of supporting statistic. We always tease the business media for taking a run of three straight jumps or dips in volatile statistics as evidence of a turn in a market's trend so that's probably just what happened here, right?
I only wish.
Here's what we got (hold on to your wigs):
"Buried in the numbers, however, and widely ignored in the media, was the news that home prices actually rose, albeit slightly, between March and April, in eight of the 20 markets covered by the index (Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Portland, Ore., and Seattle)."
Got that? Prices have been getting creamed, and in almost every market. But
month of what could have been dead-cat bouncing in
less than half
the markets surveyed and, uh, that's the number you lead with? Ugh.
I really can't wade into this article for too much longer (I left my hip-high boots at home), but let me just leave another major point for dead.
next winds its way back to that t-shirt -- or, at least, the economist who owns it -- who makes a historic parallel to other housing downturns. That, he says, signals that a recovery is all but imminent. We've been here before, he effectively says.
But have we been at a place where
were all but insolvent? Where
, one of the country's major banks, was seized by federal regulators? Where foreclosure and delinquency rates have been rising to successive highs not seen in decades and without apparent letup? With personal debt still as high as a kite?
Anyhow, we seem to be in slightly uncharted territory and The Business Press Maven, who owns a three-floor beauty that is probably depreciating faster than his car, will continue believing that ...
Bush administration officials, those impartial arbiters of market direction, say differently.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;
to send him an email.