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« Anatomy of a Trade: How to Play Apple | Main | ETF Update: The Home Stretch for Health Care »

December 10, 2009



"The intelligent consumer should be delighted when it is difficult to find the best information. That is the source of investment edge."

Yes! :)

Shane Merritt

Correct on all counts Jeff. I'll tell you that I've looked at literally thousands of blogs and media sites over the past few years and yours is one of the seven that I continue to come back to time and time again. I like your work.


Shane -- Thanks for your thoughtful response. I think that we mostly agree. This is not a surprise since we are both trying to help our clients navigate a difficult situation.

I really do not see too many of the major "liberal" sources. I watch financial TV, mostly on TIVO and mute, and check things out when indicated. I also read many, many blogs and online financial sources -- as do you!

My main theme is that this is a minefield of writers with an agenda.

Thanks again for taking the time to comment, and to follow up.



Lord -- It also extends to guests on many shows. Some bloggers have noted that when they appear, they are expected to say something definitive and controversial.

Good TV, but perhaps not much help to investors.

Thanks for commenting!



Jason -- CNBC is a moving target. They feature people who are in line with the market move in a given day, so we can all see what we want. The boxing gloves are out for other segments. Kudlow has become very political, although it still features alternative views.

My main point is that it is ratings-driven. Their online polls tell more about their audience than what the general public thinks -- as if that mattered to investing!

I agree with you that specific hosts make it tough on specific guests. We could both predict what many will say before the words are uttered.

I am glad you like the sports comparisons. I find it helpful to step away, and I hope others do as well.



Brett -- Your sports analogy is right on target. Everyone has an opinion about what is right. That's fine and healthy for a democracy.

For those of us who are investment managers, we need to look for opportunity.

I am open to suggestion. I currently believe that health care stocks are undervalued because the market hates uncertainty. Most will come out OK in the compromise.

I also think that the economy is coming back better than most believe, despite my continuing concern about employment. As I have noted, I am looking at companies that have operating leverage.

What are your thoughts about actionable moves?

Thanks for your comment!


Shane Merritt

Hey Jeff thanks for the excellent response. The bias I saw was in your list of sources of bias in Financial News, where both the political bias and bearish bias seem to be point directly to "affluent, educated conservatives and libertarians". While you're correct that describing the audience for financial data is merely an analytical activity, I’m not convinced that the biased data is being released merely to influence investors... With the case of political bias, there is a certain amount of interest not only in influencing the detractors, but also to firm the opinions of the supporters; both the invested and the uninvested (who may not fall into the set of conservatives).

Of course you noticed the fully partisan media and their assessment of the success of the cash-for-clunkers (government calculations of inflation measures changed for this specific program), Tarp, effects of stimulus while ignoring the debt, etc... and this type of “reporting” serves a purpose, as Larry Boone, from Barclay’s Capital states, ‘reassuring news’ is an effective antidote for social unrest. As an example, completely absent of economic evidence, the treasury recently reported that ‘green shoots’ of economic activity were beginning to sprout, but could not cite any specific examples that were independent of companies merely spending the stimulus or TARP (or TRAP) money they had received. A few reputable media outlets begin to notice the reports for what they represent. The Financial Times, stated in April, “Talking-up recovery prospects can make sense, economists believe. Expectations of better times ahead, if enough people believe in them, can become self-fulfilling.” Now even the weakest economist should clearly recognize this thinking as “Voodoo Economics”. And if the market relies on nothing but confidence (without actual economic data or progress), then it is a confidence game and the ring leader is a ‘con man’. Caveat Emptor.

Aside from the obvious connection about how these critical political points trickle into the economy and our own finances through earnings and taxation policy, they also affect investor’s abilities to make informed decisions at critical market junctures. Most Americans have been lulled into a state of "hopenosis" and it has to some degree leaked into the financial press. Valuable points of criticism are only recently being reported via traditional media outlets and I believe there will be a significant disconnect in what Americans perceive to be occurring and what is actually occurring in our country and the economy.

Political agnosticism is extremely important with respect to making money for clients, particularly in trend trading, but not it cannot stand in my secondary role as a steward of the financial markets and staunch defender of capitalism. Investing in and of itself, is a capitalist endeavor inasmuch as it is our end to seek and gain personal profits from our investments and that capitalism is the antithesis of socialism… they do not mix well, so by mentioning these things or taking a position- some will be offended and professional bias cannot be avoided (unless it is overruled by ones personal political bias). So you’re precisely correct, I am a big fan of your work and we do indeed agree on most things, but I thought it was important to point out the fact that there is indeed a liberal bias as well as a subcomponent to political bias and that we should absolutely hold a professional bias, to the degree in which a doctor is called to “do no harm”, we should be obligated to those things which preserve and protect the integrity of the markets and capitalism as a function. Whew… that was a bit long winded and I apologize. Also, I appreciate the opportunity for real discussion and the fact that you are by no means egomaniacal, which certainly hinders analysis.


Shane -- Of course we all have biases. I try very hard to do objective analysis here. Since, like you, I am motivated to make wise decisions for clients, I would be foolish to let politics get in the way. I have frequently written about the need to be "politically agnostic." I want to make money for my clients no matter who is in power. Presumably, you share this goal.

Please also note that I have been accused of being a right-wing Bush defender and an Obama apologist. The critics are usually reading only one article rather than the body of my work.

So I am curious about just what bias you think you detected. Before answering, you should keep in mind the difference between the analysis of data and bias. Describing the audience for financial news is no more biased that stating that old people have more political power than young people.

If you see some liberal bias in financial media, I have a few suggestions for your viewing:)

Meanwhile, I think we both agree on most of my main themes -- the loss of real research from many sources and the resulting opportunity for those of us willing to work.

Thanks for your comment. Please feel free to expand. Here at "A Dash" we welcome challenges as a way to get better.


Shane Merritt


In identifying the "sources of bias", you reveal your own bias (yes, you have a bias). I think the concept of your article is interesting, but wonder if there is a case where one might confuse correlation with causation? Are all of the smart money managers wrong and only a few blogger's and Obama's economists right? Ultimately, those who are correct will make money and those who are wrong will lose money, so the argument is a de minimus issue. Personally, I think there's very little value in what we're calling "news" these days because the media bias is nauseatingly clear. We've become a society of soundbyte hearers and headline readers. There is very little real thinking that occurs and those who often claim to be the intellectual elite have now begun to think with their feelings. Investments trends can be bought and risk management models can prevent unusual losses. That is the environment in which we operate.


What's the latest on Tiger Woods, again? (Just kidding)

Just letting you know that I'm reading your blog!

Your little sister



I think you are spot on. I may be jumping way ahead of where you want to go, however, the real question for me is what does it mean for us as money managers. Seems to me somewhere or somehow this creates opportunities for those able to think outside the strike zone. Despite the avalanche of info churned out by the sites you mention, how much of it is truly actionable? All of it just reminds me of sports radio.


In part you are right. In part I think professional writers are selected and curry selection by appealing to media owners.



I couldn’t agree with you more in your statement: “My working hypothesis is that the more educational and intellectual pieces, including those that take balanced viewpoints, draw less interest.” I find lack of viewpoints everyday in print and television, and it drives me, for lack of a better word, crazy. Here is something that I wrote for Bottom Line part of my blog. I haven’t even posted it yet because I was writing it for tomorrow morning, and then I read your blog post—so I thought it fit.

(FYI, the context of this paragraph is in a daily commentary on the market--so you know it's not just random):

Something that was glossed over yesterday, or almost ignored completely, was that jobless claims unexpected jump of 17,000. That number seems important, but it was ignored. Let’s compare this to last Friday’s drop in unemployment. One week ago the “only” story was talked about was that unemployment dropped 0.2% to 10.0%. It seemed like every financial and news channel could not get enough of the number. It was almost as if nothing else in the world mattered. However, yesterday when jobless claims increased more than expected, the analysts tried to explain their way out of the number. According to Reuters, “The rise in claims was blamed on seasonal layoffs in industries such as construction and a rebound in applications that had been held back during the Thanksgiving holiday week.” Excuses don’t belong in business. They belong in the sixth grade when you forget to do your homework. Why weren’t there any excuses to unemployment dropping; there were only good, solid “reasons.” Now, something negative surfaces and it is like, “Oh, well…ummm, Thanksgiving, seasonal layoffs, ummm…”

I’m neither a bull nor a bear; I just try to identify trends and stick with that. However, you are correct in my bearish tone. But I’m not bearish to attach more readers. I have a bearish tone because, from my view, it is where we are in the market.

Finally, and I’m sure you’ve done more research on this than me, but I slightly disagree with bear market article bias on sites/media--at least from my point-of-view. I find that media, cnbc especially, is so bullish sometimes it just seems unjustifiable. Have you watched cncb when they bring a bear on? For example, when they bring Steve Hochberg on from EWI, they hardly let him get in a word. They almost seem to laugh at him when he suggests prices targets on the DJIA, etc. But there is no laughter when the “counterview” guest gives his opinion about DJIA 19,500 by the end of the year ( a little exaggeration, of course). The anchors focus on the bull’s points.

I appreciate any time you have to share your ideas. And great baseball analogy: I’m a huge baseball fan, so that made the connection in your examples easy to understand.


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