What would we do without Zero Hedge? Does anyone else notice the rapid deterioration of financial news media, especially in the US? OK, we are not naive, there are biases in the media, traders from big ibanks talking up their positions, and trading is all about information arbitrage. But financial news used to be really serious. Traders could turn on a TV to see what the markets were doing. Bloomberg being the last financial channel broadcast on TV to avoid the "CNBC Phenomenon" or more specifically the "Cramer Phenomenon." But now, even Bloomberg TV has become a financial version of The View [8], with the occasional serious guest [9], and the occasional well researched article.
This is not meant to be a praise-all for ZH, but seriously, what other site has a continual flow of objective analysis, and breaking news that's not visible elsewhere on the net? Ok, traders don't really need news they just need data, so in today's electronic market financial journalism may be less valuable for traders. But that doesn't mean the quality of financial journalism should be allowed to deteriorate to an entertainment level. Trading is often compared to gambling, Wall St. being the 'big casino' - but most involved take it very seriously, and the markets can make or break families, companies, and countries. In most Vegas casinos, you will find all sorts of cheap tricks to overwhelm your visual cortex such as scantily clad ladies, loud bells and whistles, lots of flashing lights, free drinks and food spiked with salt and sugar, and well dressed managers waiting to be so polite and charming should they see you drop a load. See any similarities?
There is another interesting parallel with ZH, it was founded in 2009 [10], before Wikileaks became popular, and before the NSA scandal [11]. Starting with Wikileaks exposing Swiss banking activities [12], and other significant financial infos, traders and investors have started changing the way they obtain and process information on the internets. This was more solidified with the NSA scandal, although much infos released by Snowden are not of a financial nature. Many of the policies now being implemented by a global community of concerned internet users were running on ZH before all of this happened. Again, not an all-praise for ZH, but what value do many mainstream financial networks have, with all their biases, agreements with partners, and guests from large houses talking up their positions. It was a shocking for many to learn that all it takes to get on CNBC is $2,500 (probably policy changed now, but it used to be like this). Stock traders from the late 90's remember the 'Power Lunch Bump' where it was almost guaranteed that the guest, whoever he was or whatever he said, was good for at least a few points of their stock to jump while talking. A new group of retail traders flush with cash from the 90's boom were anxious to get in on the action but didn't know anything other than to turn on the TV and watch CNBC. Professional traders took it with a grain of salt, but it sure was a great way to pay for lunch. What a different world we live in.
So what's the new financial media all about? It's outlined well in the ZH Manifesto [13]:
our mission:
- to widen the scope of financial, economic and political information available to the professional investing public.
- to skeptically examine and, where necessary, attack the flaccid institution that financial journalism has become.
- to liberate oppressed knowledge.
- to provide analysis uninhibited by political constraint.
- to facilitate information's unending quest for freedom.
our method: pseudonymous speech...
anonymity is a shield from the tyranny of the majority. it thus exemplifies the purpose behind the bill of rights, and of the first amendment in particular: to protect unpopular individuals from retaliation-- and their ideas from suppression-- at the hand of an intolerant society.
...responsibly used.
the right to remain anonymous may be abused when it shields fraudulent conduct. but political speech by its nature will sometimes have unpalatable consequences, and, in general, our society accords greater weight to the value of free speech than to the dangers of its misuse.
- mcintyre v. ohio elections commission 514 u.s. 334 (1995) justice stevens writing for the majority
What ZH represents most importantly, an anonymous network of financial professionals which is extremely diverse, some are from the mainstream, some from the fringes. It's a bastion of internet freedom, representing free speech as it was intended. Of course that's just the platform, it doesn't guarantee high quality of information, but somehow, it is the only source where information is almost all quality.
Aside from retail investors, what's to keep traditional financial media alive at all? In the case of something like Bloomberg, their public media is almost irrelevant. The BB team is supporting their clients for the terminal, and so having their own network of analysts, journalists, and other types of agents makes sense to support data provided through the terminal. But what about others?
There are other exceptions such as Reuters, not a unique financial media, but they are backed by the trading element of their business. But unless you are a customer of Reuters, such as the new product giving their clients a nanosecond edge "Ultra Low Latency Data" [14] their reporting on general news and especially financial events is suspect.
Or maybe, the only thing keeping such mainstream institutions alive, are a secret group of corporate clients, that can use such outlets for their own information campaign purposes. In any event, as the markets evolve, and the internet evolves, the new paradigm in financial media is the "Bitcoin" model [15], not the USD model:
“The advantage for Chinese users to use Bitcoin is freedom, people can do something without any official authority,” said Patrick Lin, system administrator of Erights.net and owner of about 1,500 Bitcoins. Lin said he’s sticking to the currency itself, rather than IPOs, in part because of weak regulation. “The Bitcoin world is just like the Wild West -- no law, but opportunity and risk,” he said.
ZH is a public site, but represents the gateway into the 'dark' internet, at least as it's concerning financial media. Of course, there wasn't technology 50 years ago to support such a network, so it was easy for certain powerful media companies to dominate the sphere. Now, anyone with a computer and internet access, can learn as much about the markets as you can at Wharton (if they learn anything there is questionable). With that knowledge, that person can open a blog, and become their own independent financial media agent. The standing argument that bloggers are unprofessional because they don't have journalistic credentials, has been disproved in the last years, since it was sites like ZH that broke the flash trading scandal, and Wikileaks, that broke the story about Julius Baer [16].
The new paradigm of financial media is a decentralized, global network of well informed uber-agents, who proliferate their information privately through their own information portals [17], and through public networks, such as Zero Hedge [18] (currently, ZH the only one).