On The Financial Press
Via Mark E. Grant, author of Out of the Box,
This is a piece I have wanted to do for some time now. I am on TV with some frequency and I have been quoted in any number of places and I have had the opportunity to get to know a number of journalists and I count some as good friends of mine. Having had the opportunity to gain a further understanding of how financial reporting works I would say that there are tremendous gaps in reporting on events and earnings, on opportunities and pitfalls and on what is really important.
I can tell you that when you are invited on TV that it is a week to weeks in advance so that whoever is going to be on at a particular point in time is a matter of chance. It is certainly true that guests are lined up for certain events such as the release of the Fed’s minutes or when the GDP is announced but this is generally not the case with a few exceptions such as those that I have noted. Consequently when an event happens it is left to the commentators on-air to give some kind of analysis and while this is helpful in some cases; it is markedly not in others as the complexity of the issue overwhelms some reporter’s knowledge. In our digital world some business channel should disperse 300 video cameras to various investment professionals so that they could come on-line immediately and dispense some educated opinion. This would be one suggestion of mine.
Next I would say that the financial press is far behind in what the public would like or needs as evidenced by the outflow of money from equities and equity funds and into bonds and bond funds. The financial TV press is still fixated on stocks, addressing day traders that are a much smaller group of people than in times past and, in my opinion, many shows treat investments as if they were some kind of casino enterprise. In other words, there is a lot of coverage that is directed towards speculators and not nearly enough directed toward investors.
The bond markets are multiples of the size of the equity markets and coverage here is close to nil as retail and institutions alike concentrate much more on investing in bonds rather than putting their core money in equities. The media could focus on bond mutual funds, fixed-income ETF’s, which muni funds are performing well and why and examine the credits of the Municipalities and new upcoming deals the way they examine corporate earnings and the next IPO. Americans took a 36% hit to wealth during the American Financial Crisis and many people and institutions want their money in the senior position of the capital structure, in bonds, so that they do not lose their principal and the media barely gives a nod to providing information for fixed-income investments during their entire programming day. This is a huge error in judgment in my opinion and one that should be corrected. Even in the area of news it seems to be that one question is how some event will affect the stock markets but there should also be a discussion of how it affects the bond markets and the interplay between the two markets should be evaluated.
There is an old saying on Wall Street that to be successful one must “follow the money” and it is quite statistically evident that the money has flowed into fixed-income investments and that the financial press has not followed it. I say this without rancor or even criticism but just in an honest attempt to provide a suggestion for the people that are employed in the financial media. Even in what is very liquid, that is listed, that trades in small and large size there is a tremendous gap, in my view in coverage. There is a whole liquid market in preferred stocks, in a number of listed bonds, in ETF’s, in mutual fund shares that could be compared and should be compared to any return on dividends. A dividend can be increased or waived with a singular board meeting in most cases while the non-payment of senior debt throws a company into bankruptcy and in many instances, these days, it is possible to find corporate bonds with a higher yield than some company’s dividend and yet this is almost never discussed or evaluated. Certainly the public is heavily invested in municipal bonds to avoid tax consequences and there are new deals that come out daily and yet there is scarcely a mention of these new issues while IPO’s are discussed and touted with great frequency. Most people and most institutions are investors, not speculators and the real money investors are getting the short shrift in my opinion.
There should be discussions about how the money managers are doing and comparisons should be made. Various specific fund managers should be highlighted and either given a thumbs up or a thumbs down based upon their performance. The same could be done for ETF’s as compared in various spaces such as mortgages, high yield or emerging markets. Various publications such as the Wall Street Journal and Barrons make some stabs at this but none of the television media even notice that these other options exist as their concentration is almost 100% on equities. Each and every day there are not only new Municipal bond offerings but bonds linked to inflation or step-up bonds of one kind or another or some new corporate debt deal. The fixed-income market is every bit as exciting as equities but it is brushed aside by the media almost as if it didn’t exist and I think it would be in everyone’s interest if there was a re-think by the various media enterprises.
My final comment would be directed at analysis. We have talk shows that analyze the events in Washington, world news and so forth and yet there is almost no in-depth commentary on the financial markets. When you are a guest on TV, as an example, you generally have three to five minutes on air. The reporter can and does ask you almost anything and even if you answer the question directly there is no real time to give an informative response. I have been asked any number of times “How do you fix Europe” and it is just not possible to give any kind of real answer in some three minute segment. People seem to like and watch programs such as “Sixty Minutes” or “Face the Nation” and I would like to suggest that some media group or another provides thirty minutes with some Wall Street professionals to address the important financial questions or to provide some explanation of asset-allocation or why one sector of the market is now better than another. All of this does not need to be dull or boring and it could be presented in some fashion that would hold the attention of those watching and the playing field should include all types of investments and not just equities. That is my opinion and I hope that some of you may take my viewpoint into consideration and also that some others of my brethren might make their opinions known. The people on Wall Street may not be the biggest part of any audience but we are the people that pay for the ads so, in the end, we do matter. I get the joke that news of any sort must be entertaining but I can assure you that any number of investment professionals are quite capable of presenting information in an interesting fashion. The investment world has changed and I encourage the media to grasp it and to change as a result.