The Information Age has been forging a coup d’etat on the Old World Order in financial media. For example, television personalities like Jim Cramer (Mad Money) cannot escape their dismal track record as it’s posted in real-time by hordes of bloggers. However, we didn’t always have this level of transparency, and we have hardly reached the Holy Land where all “experts” are held completely accountable for their picks.
One of the things I like most about StockTwits is the meritocracy aspect. If you are a good trader or investor, people will follow you. If you suck, they will not. If you are extraordinary, the founders of StockTwits — Howard Lindzon and Phil Pearlman — will be calling to add you to their Recommended List. Simple, yet valuable for both “experts” and “followers.”
However, the mainstream media is less rigorous about who uses their megaphone. For example, Larry Kudlow was bullish about the economy until only recently. That means the celebrity economist on CNBC was not qualified enough to know the credit and housing bubbles would crush the global economy (or, he is an ideologue, which again means he is not qualified to report the news or give unbiased advice). Should he have a key show slot on the most popular financial television network?
Another interesting example is Peter Schiff at Euro Pacific Capital. First, Peter is an incredibly smart guy (and I don’t know him personally). However, top indie blogger Mike Shedlock at Mish’s Global Economic Trend Analysis brought to light some very important evidence proving Peter’s media personality (i.e., “expert”) was completely not correlated to his investment returns (i.e., reality) in a buzz-worthy article entitled, “Peter Schiff Was Wrong.” So, why is Peter still one of the most popular contributors to Seeking Alpha? Why is he still a go-to guy at the major financial media outlets? Basically, he will lose your money as fast as billions of other idiots, except he happens to speak as well and persuasively as a top white-shoe attorney or salesman.
I asked Mike Shedlock what happened with the Peter Schiff incident. He replied, “Schiff refuses to debate me or discuss with me. I offered to have it taped, and if he did not like it [the interview] it would not air. He even refused that.” If Peter has a valid defense against Mike’s evidence, he should present it. If he cannot defend his record, then he should sink to the bottom of the meritocracy.
A similar incident happened between CNBC host Dennis Kneale and popular indie blog Zero Hedge. I have written extensively about this issue, but the point I want to make is Dennis and his producer disingenuously represented an invitation to debate the founder of Zero Hedge, Tyler Durden. In this case, Dennis, while on his boob-tube bully pulpit, ranted that Tyler refused to come on-air to debate Dennis about the value of bloggers and independent journalism (which, apparently, Dennis despises). However, Tyler posted the email exchange with the CNBC producer proving that it was Dennis who chickened-out of an honest debate.
I would also note that game-show host and self-proclaimed financial expert Ben Stein uses YahooFinance and, until last week, the New York Times to destroy middle-class portfolios. As Barry Ritholtz at The Big Picture eloquently said, “The commentary he [Stein] produced at the Times was amongst the most irresponsible, poorly researched, and just goddammed wrong stuff ever to grace the business pages of the Grey Lady.” Is it any wonder these media outlets are losing market share as fast as record companies?
What is going on? This is clearly the way the Old World Order of media has abused it’s opponents and competitors for centuries. But we are now living in an age when every statement can be researched with a few clicks. We can obtain direct responses from anyone without relying on major media outlets to force-feed us heavily edited and manipulated information. So why do these media goliaths continue insulting our intelligence and laughing at us by calling their misinformation and entertainment “news,” “objective,” “fair and balanced,” or “trustworthy”? Because we still point our eyeballs and ears toward them (which they in turn sell to advertisers)!
Rather than stage a scene from the movie Network and start pointlessly screaming “I’m as mad as hell, and I’m not going to take this anymore!” — which clearly did not work because these issues existed when the movie released in the ’70s and nothing has changed — I think we need the passion of the open-source movement to finally break the camel’s back.
First, we need a website which tracks the picks of everyone who promotes investments on TV or in one of the major print publications (including blogs). These people should get easy-to-understand ratings for their accuracy. For example, if someone’s returns are on par with the S&P 500, they get a C. If they are worse, the grade is worse. If they are better … well, you get the picture. Since we’ve all been to at least elementary school, we understand how this system works. You want to follow the students of the market who are getting A’s and B’s, and avoid those who might be better at something else.
Second, we need to stop patronizing entities which cause us to lose money. If Kudlow or Cramer didn’t get you out of the market before the first cracks turned into earthquake sized-gorges, stop watching their shows and buying their books. If you keep your financial television network on mute, turn it off so they will stop counting you as a viewer when all you want to know about is breaking news (which you can get from a thousand sources on the web without all the extra crap). If your investment mentor, newsletter service, or money manager does not post their picks and returns, cancel or fire now. If we vote with our wallets, transparency will become the rule rather than the exception.
There are a few other solutions to this issue, like our inaugural First Amendment Awards for Outstanding Journalism. We will be sharing additional solutions soon as we ramp up at Wall St. Cheat Sheet to put our money and energy where are mouth is. We hope some of the new projects we launch will add value to investors and traders, and over time our value-add will start a positive feedback loop.
Have hope and take action! We believe we are living through the dawn of a new business cycle during which new leaders will emerge in media while old dinosaurs will get buried if they don’t shape up incredibly fast (See: “CNBC Slides as Viewers Get Crunched“). As a counter-cultural icon once said, “Turn-on [your brain], Tune-in [to reality], Drop-out [of the culture of misinformation and manipulation]” … but he forgot to add, “Drop-in to the New Media Order where Honesty and Trust are our greatest assets.”
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