At "A Dash" we are exploring the topic of financial blogging. Last month we had a two-part series (here and here) stimulated by an "outside" comment on blogs versus regular journalistic sources. Readers should check out the full argument, but our basic position is that many blogs and journalists alike overstep their expertise. The writers lack the necessary skills to evaluate the conclusions they reach, misleading many well-intentioned investors. We suggested that bloggers, while perhaps remaining anonymous, should reveal their credentials.
There have been several interesting developments in the last month, as follows:
- An intelligent and skillful young blogger, Rob Pitingolo, is providing interesting comments on many subjects at Greenback Consulting. He wrote me to object. His interpretation (somewhat oversimplified for this report) was that we thought that he should not be allowed to blog, or that readers should ignore him.
- One of the Three Amigos called me to bemoan "resume fraud." This Amigo, holding various advanced degrees from institutions like The University of Chicago and Oxford, suggested that real knowledge no longer mattered. Anyone could claim to be an expert in the Internet world and many others claimed degrees they had not earned. Employers do not check, and if one is not a potential employer it is almost impossible to check.
- Barry Ritholtz, as always a leading voice on financial blogging, recently highlighted the monetary incentives involved in creating a high-traffic blog and thoughtfully describes the battle for fair payment.
- Art Cashin, in his always delightful daily market commentary, Cashin's Comments [UBS account required], recently recalled the life of Ferdinand Waldo De Mara, The Great Impostor. Readers who never read the book or saw the old Tony Curtis movie would enjoy checking it out. Art wrote as follows:
"It was during the toughest days of the Korean War (er...make that "Police Action"). In the choppiest of seas, the young surgeon was called upon to remove a bullet from a soldier's heart. Shortly after that, he saved a man with severe wounds and collapsed lungs. The medical work was so amazingly successful that newspapers and magazines ran special features on the young wonder surgeon.
Several folks who bought the magazines noticed the picture layout and the coincidence that the guy in the photograph had the same name as a doctor they knew...Dr. Joseph C. Cyr of Vancouver. They sent copies of the photos to Dr. Cyr. He noticed that the hero not only had his name...he had also attended the same schools, in the same years and got the same grades as Dr. Cyr of Vancouver. He called the Canadian Navy to question the coincidence.
That brings us to this day (+1) in 1951. The Navy had discovered that the guy who performed those delicate operations on a pitching vessel in primitive conditions was not Dr. Cyr. In fact, he was not a doctor at all. He was a U.S. citizen named Ferdinand Waldo De Mara. The Navy was ready to punish to the max...but De Mara's fellow officers, the crew and the men he had saved testified he was the most competent, dedicated and sincere man they had ever served with. Perversely, the Navy inquiry also produced high praise for De Mara in the roles he had served in before he impersonated Dr. Cyr and joined the Navy. He was praised as a superior in a Trappist Monastery, a professor in three different colleges (in different subjects, no less), a jailbird (desertion from previous military service) and, perversely, later as a prison warden. In all of the above positions and a dozen more (except jailbird), De Mara was an impostor. He had used different names and falsified various diplomas and accreditations he'd never won."
Financial blogging is a tremendous resource, providing both more information and diversity of interpretation. This is a wonderful development for both investors and traders. In general, more is better.
Readers have a right to know about the source of information. The fact that someone writes a popular blog or is a columnist for a major publication tells only part of the story. In some cases it is nearly impossible to determine the educational background of featured writers.
Why does this matter? The basic answer is that one does not know the value of training and education without having that experience. Those who disparage several years of Ivy League education in economics without personal experience simply do not understand. While leading professionals disagree about results, there are many topics where all agree. There is also a strong methodology developed over centuries of work. While we featured De Mara, he was obviously an unusual case. Does a leading blogger with basically no credentials deserve our attention -- a smart guy without training?
At "A Dash" we try to find the best information from every source. Doing so requires understanding the strengths and weaknesses alike. Unfortunately, many of those writing are willing to stray far beyond what they really understand, while disparaging those who look deeper and with more skill.
Barry Ritholtz is pointing us in the right direction for understanding the issue, but the conclusion is still in doubt. What will happen when hundreds of thousands of new investors switch from mainstream sources to blogs? Where will they turn? How will they determine the best sources?
The right blog for a trader may not be the right one for a long-term investor. Those who have the skill to evaluate information should make different choices from those who are befuddled by disparate arguments.
There are more questions than answers on this vital question, so reader comment is especially welcome.