As an investor, your job is to make profits. As a journalist, a reporter's job it to make copy. Let The Business Press Maven hold your hand through an explanation of how the two aims can conflict, confuse, cross, concuss and convulse. (Bet you thought I couldn't come up with that fifth one, huh?)

Just this week, the business media declared the housing market dead, again. Why is this significant? Because only a few weeks ago, milking a hopeful story line out of a statistical blip, the business media declared the housing market on its glorious way to recovery.

It was during this past Holy Season (late December) that The Business Press Maven had to throw verbal haymakers at the idea expressed by the business media that the housing slump was over.

Boy, were they looking to make copy in the quiet of the holiday period. Without much other news around, scribes from the wire services to The Wall Street Journal took two modest (warm weather-influenced) blips up in existing home sales numbers and wove it into headlines, leads and tall tales about the housing bust being over.

The Business Press Maven put down his egg nog long enough to perform some kung fu on this nonsense, pointing out -- among other things -- that the housing market was still obviously weak in key growth sectors of the country and builders would have to write off land for plots that people were going to build on but had backed out of.

Sure enough: The land charges started to come only days later. (Just wait until spring, when even more come, as the market's final hope for a magically great season fades.) Then this week: guess what?

It was reported that sales of previously owned U.S. homes were down 0.8% in December, making 2006 the worst year in the past 17. What happened to all those declarations of possible recoveries, those happy tales we read about only a few weeks ago?

Here's a typical lead, this one from Reuters¿

"Sales of previously owned U.S. homes slipped 0.8 percent in December and took their biggest tumble in 17 years for all of 2006, leaving in doubt whether the worst of a housing slump has passed."

Now, you see, they are writing about "doubt" that the housing slump has passed. But besides some journalist looking to run with a few random statistics during the lightest news period of the year, no one in their right minds was saying it had passed. OK, OK -- maybe some local realtors looking to pawn off inventory on the gullible, but you get the point, right?

You need profits, but they need copy. So they structure a story around a purported recovery. That¿s more of a story than some old, bad number. Then, when contradictory numbers come out, you just write about doubt. But it's doubt in something that few right-minded people believed in the first place.

A journalist can ride an idea one way and then the other and emerge ahead. He gets two articles out of it. As an investor, though, you get two losses from the same stunt.

What's Wrong With This Picture?

While we are on the subject of making copy, verbs and adjectives are good filler, right? And they are lively and make for fun reading? But the market is volatile enough as it is, and good copy often gives the investor the mistaken impression that things are more volatile than they really are. Look at this typical effort from the Associated Press, brought my way by reader Mark Solomon from Roswell, Ga., who gets as emotional about this stuff as I do:

"NEW YORK (AP) -- Stocks skidded lower Monday as growing concerns over technology companies led jittery investors to pull money out of the market. The Dow Jones industrials fell 100 points ... The steep decline continued the market's recent erratic trading pattern¿"

This is like one of those kid's puzzle games. Can you find five mistakes in this picture? Five things that, read uncritically, can confuse investors and prevent them from making money?

Well, how about 100 points being written about like it's a lot. That was fine a generation or two ago, but now, with the market over 12,000? One hundred points is a rounding error. Skidded? It¿s a blip on the base of 12,000. Investors are "jittery" when the market goes down a fraction of one percent? Even use of the term "investors" is broad enough to be farcical. Do investors "pull money out of the market?" And if so, how does AP know? Dudes, it's traders who go in and out of stocks on a daily basis, and even they aren't really pulling their money out of the market. They are bouncing between tech and some other flavor of the day.

So what's the upshot of all of this for you? Well, if you are smart about it, when you see journalists making obvious efforts to fill copy instead of reflect reality, you can make money by trading the spread. Reality always catches up to trumped-up story lines, which are created to have something exciting to say. People seem scared off by what they are reading about a volatile market. Realize how it is really much steadier than they say. Are journalists strapped for stories declaring a premature end to the bear market in housing? Short some housing stocks to take advantage of those land charges sure to come. You'll be getting paid to read.
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; click here to send him an email.

If you liked this article you might like

Sell Hewlett Packard! Against the Grain

Sell Hewlett Packard! Against the Grain

They Just Don't Get Nordstrom!

They Just Don't Get Nordstrom!

The Real Deal With Nordstrom's Sales Numbers

The Real Deal With Nordstrom's Sales Numbers

Volunteer Firemen Help Cash-strapped Cities

Volunteer Firemen Help Cash-strapped Cities

Long Live the New CEO!

Long Live the New CEO!