The Value of Editors

One of the biggest investor challenges is figuring out what to read.  Another is whether to have confidence in the headlines and the content.

Amazingly, some do not carefully read the entire article -- depending instead on the headline.

Let us try a small test on the astute readership of "A Dash."  Here is a factoid printed in many newspapers via the Associated Press (one example here).

With public spending at more than double its gross domestic product, Japan is trying to manage its ballooning debt while addressing high unemployment and stagnant growth.

I am going to assume that my readership sees the issue immediately.

Hat tip to my brother (retired from THE Ohio State University -- splitting his time between advising countries on improving economic education and daily appointments with Mr. Titleist).  His email question to me was why his local business editor did not see the problem.  I found that the mistake was uncritically accepted by many papers.  I could not figure out how to find any who corrected the error, but I hope there are a few.  Maybe we could search for other language and see if they fixed the problem.

In an era of cutbacks in news budgets we have lost the ability to evaluate content.  The simple fact is that most editors, even of major publications, may lack essential basic knowledge.  We can contrast this with the actions of Internet curators like Abnormal Returns, who have knowledge and experience.

A Second Example

Seeking Alpha has a popular and helpful feature called Market Currents.  Someone on the team picks up breaking stories and highlights them for those of us in the Seeking Alpha community.

Here was the "breaking news" on Thursday:

Thursday, August 5, 2:24 PM John Paulson has turned bearish in his positions after pushing a narrative of U.S. recovery over the last year. After Paulson's hedge funds were hit hard in Q2 by a rise in market volatility, he has cut his net long bets across almost all funds.

In the comments I pointed out that this was not what the article said.  Paulson had gone from 140% long to 107% long.  This was a blunder by FT.com in the headline and also by Seeking Alpha in accepting the  headline without reading the article.

This example is not unusual.  There is a simple lesson.

If intrigued by a summary, read the article yourself.

Comments

[Dan @ Casual Kitchen]

Sadly, it takes time and attention for individuals to evaluate and sanity-check media content, much of which is repackaged and, as you say, contains errors.

That's why I believe this is a new era for the disciplined and detail-oriented individual investors.