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WSJ Jumps the Shark

Posted By Barry Ritholtz On January 22, 2010 @ 7:21 am In Financial Press,Politics,Really, really bad calls | Comments Disabled

The politicalization of the WSJ has moved to a new and more risky phase. The paper is now in danger of being a money loser — not for its investors (tho that has already happened), but for those traders who read its content.

It used to be that articles on the Market or specific companies or various finance stories were objective and reliable and free from bias. Sure, you could always count on money losing, bat-shit crazy nonsense in the editorial pages, but that was a special area of sequestered partisans, who due to their insanity cared not a whit about how much capital their lunatic ravings lost their readers. (The list is long and varied, but the Boskin “Obama Crash [1]” on March 6th is a good place to start; then read anything Don Luskin writes — he is a reliable contrary indicator).

I assumed the drunks on the OpEd page did not care about what they did to your portfolio if you drank their Kool-Aid. But they were easy to steer clear of  — you simply avoided that page, or read it and laughed. Smart investors could easily say “Go sell crazy somewhere else –we ain’t buying.” That was possible because you knew that the business pages were sacrosanct, always run with a steel-eyed objectivity that professionals could rely upon.

That is no longer the case. The lunatics now run the asylum, and henceforth, I am moving the WSJ into the column of “Stuff to read, but not take very seriously.”

I am bereft over this. This is a major change for me, for I have loved this paper for years, even decades. I read the Times (along with many other papers [2]), but as someone who works in finance, I marveled at the quality and breadth of the business reportage at the Journal. Accuracy was paramount, political bias limited to the cartoon (Opinion) pages. For a long time, it was the best paper in America.

Those days are now ending.

I keep seeing headlines that are blatantly political, articles that looked to be edited by a ham-fisted politburo apparatchiks, other signs that the usual outstanding journalism at the WSJ is under assault. When I read David Carr’s NYT article [3], I hoped he was referring only to the DC coverage, and not Wall Street, Markets, or anything that investors rely on.

Sigh. If only that was the case.

Regular readers know that I despise political parties, believe partisans suffer brain damage — literally — they have the same cognitive deficits that ardent sports fans suffer from. I have trashed both Bush and Obama, but moved to a bullish posture when despite either’s incompetence, they accidentally did something that caused a bullish set of factors to predominate. Independence matters; Politics and investing are a fatal combination to performance.

My bottom line for content is performance — if I can rely on something to provide me insight and information, it becomes a steady part of the media diet. Once I suspect they are no longer capable of that simple investor service, they go on a short leash. Eventually, they reveal themselves as money makers or money losers, and today, the WSJ crossed that line. They are now money losers to those who read them.

Quite a difference a few years make.

A specific article that led to this sad conclusion? The most egregious example (of many) I noticed was this front page headline: New Bank Rules Sink Stocks [4].  This is the sort of silly headline I expect from lesser media outlets, not the Journal. Without getting too philosophical, we know that day-to-day action is mostly nonsense. Selecting a causal factor from the cacophony of news releases, earnings, price data is all but impossible.  There is a whole lot of noise, and very little signal. Assigning a definitive causative factor is at best a guessing game, at worst an exercise in futility.

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[5]

WSJ.com January 22, 2010

For example, I cannot tell you why we were down 100 on Friday, up 115 on Tuesday (supposedly on the Brown victory) down more than 100 on Wednesday (on the Brown victory as well?), then down more than 200 yesterday. Perhaps a 68% gain in 10 months had something to do with it. Or perhaps the fact that despite a major rally, the finance sector has made no upwards progress for 6 months. Or the dollar was rallying.

But it doesn’t take much looking to see other, more plausible, less politically motivated explanations than the floated Volcker/Obama proposal. The market’s biggest losers were not finance related issues, but rather were commodity-related stocks.

While the financial sector suffered a 3% decline after some disappointing earnings from various banks, it was the commodities sector that got whacked 4.3%. China, the driver of much of recent economic improvements,  made a major announcement they were restricting bank lending to cool inflation and slow the economy.

I noticed this and pointed to a China article in Reads [6]; Tom Petruno at the LA Times pointed out the relationship between the change in China policy to the Commodity sector [7], and how substantial those losses were.

The WSJ article? Never so much as mentioned China or commodities.

Hence, I must now move the Journal out of my column of “Essential investor reads,” and into the column marked “Infotainment.” Under Murdoch, the paper has become politicized to the point of losing a significant portion of its value.

Investors beware.

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S&P Financial Sector

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Previously:
Murdoch’s WSJ Changes Creates Opening for NYT, FT [9] (April 24th, 2008)
http://www.ritholtz.com/blog/2008/04/murdochs-wsj-changes-creates-opening-for-nyt-ft/

Sources:
New Bank Rules Sink Stocks [4]
JONATHAN WEISMAN, DAMIAN PALETTA And ROBIN SIDEL
WSJ, JANUARY 21, 2010
http://online.wsj.com/article/SB10001424052748703699204575016983630045768.html

Dow goes negative for 2010 as sellers swarm [7]
Tom Petruno
January 21, 2010 | 2:23 pm
http://bit.ly/7PecP5

Under Murdoch, Tilting Rightward at The Journal [3]
DAVID CARR
NYT,  December 13, 2009
http://www.nytimes.com/2009/12/14/business/media/14carr.html


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2010/01/wsj-jumps-the-shark/

URLs in this post:

[1] Boskin “Obama Crash: http://www.ritholtz.com/blog/2009/12/michael-boskin-on-the-obama-crash/

[2] many other papers: http://www.ritholtz.com/blog/2010/01/wsj-jumps-the-shark/#comment-249386

[3] NYT article: http://www.nytimes.com/2009/12/14/business/media/14carr.html

[4] New Bank Rules Sink Stocks: http://online.wsj.com/article/SB10001424052748703699204575016983630045768.html

[5] Image: http://www.ritholtz.com/blog/wp-content/uploads/2010/01/WSJ-POLITICIZATION.png

[6] Reads: http://www.ritholtz.com/blog/2010/01/thursday-reads-2/

[7] change in China policy to the Commodity sector: http://latimesblogs.latimes.com/money_co/2010/01/wall-streets-slump-today-wiped-out-the-last-of-the-dow-jones-industrial-averages-year-to-date-gain----and-fueled-fresh.html

[8] Image: http://www.google.com/finance?client=ob&q=INDEXSP:SPSY

[9] Murdoch’s WSJ Changes Creates Opening for NYT, FT: http://www.ritholtz.com/blog/2008/04/murdochs-wsj-changes-creates-opening-for-nyt-ft/

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