Market Commentary for the week of December 21, 2009

Don’t be foolish.
Who do you trust more?
(1) Gene Hackman
(2) Sam Waterston
(3) Willem Dafoe

Ah yes, a cop, a district attorney, or the son of God.

You may not know it, but these three actors, and others, are the “voices” of today’s financial institutions on television and radio. Which begs the question: “Does the subliminal intonation of financial-speak really influence where you’ll go with your money or who you trust more?” Can the media actually influence the purchase/sale decision-making of the public?

Hey, they can if it’s automobiles, whiskey, vacation spots, clothing, and toothpaste. Why not investing?

Throughout the fiscal crisis of 2008-2009 all the networks seemed consumed by the gravity of the subject matter, not the least of them being business networks like CNBC, Fox, MSNBC, CNN and others. (Under full disclosure, let it be noted that I am a contributor to some of those outlets listed above.) Seemingly, minute by minute, coverage of the financial crisis pelted you with fact, opinion, and rhetoric. In days gone by, we used to wait until the next day’s newspaper to know what happened yesterday. Today, the proliferation of instant access, instant opinion, provides the means for hasty decision-making and incomplete vetting of the subject matter.

“What?” you say. “Incomplete analysis?” “Yes” I respond.

Motivation.
The media, indeed, adds a sense of immediacy to our news, but it can also turn a cyclical situation into a frenzy, resulting in more hysteria and unnecessary volatility. Adding fear to an already frightful situation exacerbates the cauldron of doubt, skepticism and mania.

Consider that more people are now “plugged in” to news through internet and instant media access, adding to the ingredients for mass hysteria. When conditions are good, the media can fuel an upswing; when things go badly, the networks are jumping over each for “ratings first,” telling us how much worse it’s going to get, and stoking the fire of negativity.

It is probably naïve for me to hope that financial media might actually serve the public’s needs by answering basic questions, and making the hard look easy. But consider there’s danger in serving its own needs first, playing on the vulnerability of listeners and giving them advice which might not be appropriate to their unique situation.

Value.
While it is also presumptuous of me to assume that all media are bad, or that all viewers are gullible, it is safer to harken back to an era when investing was a noble undertaking, a means between you and your ultimate goals, rather than a pitch-box through which all kinds of junk is thrown at you without empathy or consideration.

Commercials and opinion will always be with us. Not long ago we heard how “When one company speaks, people listen,” or that they “Earned it” (who better than John Houseman?).

My contention, though, is that the sheer enormity of financial coverage and commercials can also lead to a sense of helplessness and a feeling of being overwhelmed. Losing control of information is as bad as too much information.

(There will be no commentary published next week. Our next contribution will be the Quarterly Market Outlook, January 1, 2010. Happy Holidays!!)