(Editor's note: To access some of these stories, registration or a subscription may be required. Please check the individual links for the site's policy.) If it sometimes seems as if The Business Press Maven is inherently negative, as if he has a lump of lead where his heart should be, that's only because it's absolutely true. So it's with considerable psychological pain that I have to point out to investors how much better off they are in relation to the business media's misunderstanding of Federal Reserve intentions this January vs. last. You got that? Follow the bouncing ball here, because it is important: The business media on the whole were wrong about the Fed at the beginning of 2007, just like 2006. But last year, their mistake held danger for investors. This year, it holds opportunity. Travel back in time with me. A year ago, as you know, the business media nearly had to take out a protective order against The Business Press Maven. What had me in a rage was the accepted, oft-stated wisdom that Federal Open Market Committee notes indicated coming interest rate cuts, or at least stability. Anyone who actually read the things realized that they indicated nothing of the sort. No matter. The only world most business journalists remembered living in was one of declining interest rates, and that was reflected in such an utter misreading of FOMC notes that a lot of reporting sounded downright delusional. In one particularly egregious example (
a year ago almost to the day ), the business media drew huge future conclusions from notes on a Fed meeting that not yet sworn-in Fed Chairman Ben Bernanke, who would guide policy, couldn't even sit in on.
In this spread between perception and reality, there was danger for investors. Stocks didn't really start to move until that danger was taken out of the system, replaced by the summer of 2006 with a
largely accurate portrayal of reality. In the last couple of days, however, the business media have started again to misinterpret Fed intentions. But here's the reason, to paraphrase Ronald Reagan, that we're better off now than we were one year ago: This time, the business media, wrong last year in seeing a near guarantee of interest rate cuts, are wrong in seeing a clear and present danger of rate increases. In this year's model of the gap between perception and reality, there is opportunity for investors. Take this New York Post Jan. 4 story that represents the vast majority: " Fed Knocks Stox," which leads off saying "Wall Street roared into the new year and scored trading highs, but got tripped up promptly by its lurking old demon: possible interest rate hikes." Forgive The Business Press Maven for casting aspersions on such thoughts, but I actually read the minutes. And if anyone can find much in them that is anything more than perfunctory -- and responsible -- boilerplate cautions about inflation, do tell. In fact, the only new and notable language in the notes were the words dedicated to the issue that there may have been some recent overstating of GDP growth.
Talk about an issue the business media miss. The Business Press Maven has burst capillaries yelling about original GDP reports being reported on as if they'll stand the test of time, with tons of conclusions drawn from them. When the GDP is revised, new conclusions are drawn. In this case, the Fed is hinting at downward revisions, revisions that obviously will affect the interest rate outlook. But do the business media pay attention? Puh-lease. I tell you, maybe I once had a big heart and it only turned to lead after reading so much of this stuff. Maybe it's all the organic food my wife feeds me. It has warped my judgment, at least on the fate of Whole Foods ( WFMI). In 2006, it was one of the few companies I had to throw my hands up on. I couldn't decide whether competition for everyone under the sun in the organic realm would shrink its enviable margins, or whether the competition merely indicated a wider acceptance of organic food and was not of direct or sufficient quality to truly compete with Whole Foods' vaunted store operations. If the former was true, the stock was a short; if the latter, Whole Foods was a bargain, because the stock fell to the tune of 40% in 2006. In an unprecedented show of puzzlement, I even asked you readers to tell me what you thought. You were basically split. Thanks for nothing.
All this confusion is why I looked with such great anticipation to a column on Slate on why Whole Foods' stock has been tanking -- though, as is made clear in the subheadline, it shouldn't be. Whoa, The Business Press Maven thought in his early morning delirium, this was an answer. At the very least, it was a writer who somehow had emerged from "on one hand, on the other"-land to offer an actionable opinion. Journalists are trained to write about what is. But stocks are priced on what will be. So business writers need to extrapolate. They can't make any judgments merely by looking at current margins, especially if the operation with the thinner margins is starting to peddle the same product as the operation with the thick margins. In this case, and in many others, there's an obvious clash. The Slate column compares Whole Foods' margins with those of traditional supermarkets, but doesn't even touch on what may happen -- nay, what appears to be happening -- to margins and same-store sales at Whole Foods as those traditional supermarkets carry more and more organic food. Put that shade-grown, free-trade endive in your pipe and smoke it.