WSJ Jumps the Shark | Hacker News Reader

WSJ Jumps the Shark

ritholtz.com

81 pointstortilla67 comments

I'm surprised this actually made it to HN.

I've read Barry's blog and have met him in person. He's one of the brightest, most realistic financial commentators out there.

We've seen an increase in media politicizing market movement. The example he cites was Obama coming out and making comments about financial regulation, and then the market takes a dump.

So you'll see on Marketwatch, Y! Finance, Motley Fool and others about how the president's comments caused the market to drop. This is rubbish.

Short term noise in the market happens. We were due for a pullback and this, combined with Greek CDS spreads and China's rates, prompted some weakness.

The same thing happened during the inauguration, how the market flew further south. And then the pundits came out and proclaimed how the new administration would be terrible for equities-- and then we rallied. A lot. And those pundits who thought there was some correlation between politics and markets disappeared.

Same thing here. The WSJ has increased it's politicization of it's content, when it has been known for the best financial news source out there. It may sell more papers, but they are significantly compromising the intellectual integrity of the staff and the brand.

Ritholtz has an excellent blog, I don't know how he finds the time to write so much. Highly recommended.

I highly recommend his book "Bailout Nation," the most comprehensive overview of our current situation. Data driven and very well written.

So you'll see on Marketwatch, Y! Finance, Motley Fool and others about how the president's comments caused the market to drop. This is rubbish.

No, this is rubbish. When the government seeks to regulate huge profit-makers at banks, it's completely rational for those banks' values to fall. This is the consensus view of bullish and bearish commentators alike, and I have no idea why anyone would disagree. The blogger points out that commodities fell harder. That and a nickel and a time machine will get you a cup of coffee.

Short term noise in the market happens.

A five percent haircut is not "noise". http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

And those pundits who thought there was some correlation between politics and markets disappeared.

No they didn't, and the rally has been extremely political. I hate linking this over and over, but it needs to be understood. There is a near-perfect inverse correlation between the value of the dollar and the market:

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

You can creepily see this happening on a tick-by-tick basis. I don't know why this is so perfect, but I suspect it almost has to be algos doing it. This is the kind of thing that the government (may) start regulating.

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&... [<-- jan 22 2010]

This is not historical:

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

When the government seeks to regulate huge profit-makers at banks, it's completely rational for those banks' values to fall.

You're assuming markets are rational, and that the short term change in market structure was directly caused by a speech.

Again, the point I was trying to make was not that the sentiment due to the speech had shifted, but that the analysis by the WSJ was very politicized and intellectually dishonest.

The blogger points out that commodities fell harder. That and a nickel and a time machine will get you a cup of coffee.

And the real question then is, did the overall markets fall because of Obama's comments, or because of dollar strength and the widening of Greek CDS spreads? Since materials have a higher weighting in the market, would we not assume the latter?

There is a near-perfect inverse correlation between the value of the dollar and the market

That correlation started around 2H2008. Correlation running about -.5... nowhere near perfect; however, historically we have a positive correlation. Source: http://bit.ly/spycorr The liquidity infusions that the market has seen has very little to do with U.S. politics.

This happens due to capital inflows/outflows from different markets. If capital flows out of bonds, it most likely goes into stocks, which gives us this "creepy" movement... but there's nothing sinister behind it. Algorithmic trading has little to do with this, if at all.

One quick note: UUP is probably the worst tracker of dollar strength. It's an etf that is structurally damaged and has contract rollover issues due to it's exposure in front month dollar future contracts. I would suggest DXY or looking at a basket of currencies.

Yeah, it's just awful. Not even worth the trouble of shorting.

http://www.marketwatch.com/investing/index/DXY/charts?countr...

I use it as an example because it's actively traded.

If capital flows out of bonds, it most likely goes into stocks

Pass the bong. What's been going on is simple: Bernanke has been scuttling the dollar in order to force people into all forms of risk. Money has been going to bonds and stocks both, the riskier the better:

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

Without RTA, I don't think I agree with your comment. For two reasons.

First, markets move on information. Maybe one piece of big, important information, like a war, or more generally millions of bits of information. But it is a reasonable observation to note the correlation between big news stories and market moves.

Second, most times markets don't move on big news. In that case, the trend that I've seen for over a decade is for people to simply speculate on why the market moved one way or another for a particular day. It's not science, it's not news -- it's informed speculation, or entertainment.

I think serious investors let this type of entertainment roll off of them -- after all, people like to chat, and media forums like the WSJ (or HN) provide them a forum to do so.

Separating the noise from the signal is the entire purpose of becoming a good investor. Thinking it's all signal or all noise is a good way to never be one.

First, markets move on information.

That's half true. Markets move from capital flows of institutions on much larger timeframes-- those flows are what create trends. There is an underlying auction process that facilitates trade and capital flow-- the auction process is the short term noise that is dominated by the larger money about 30% of the time.

Yesterday was a great example. Yes, the market had a big move on the news, and capital flows moved quickly out of domestic equities. But we also had rate problems coming out of China and weakness in European credit markets. To say that the brunt of the market movement was caused by a political speech does not correspond to reality.

it's informed speculation, or entertainment.

Yes! And the WSJ generally avoided that, until recently.

I think serious investors let this type of entertainment roll off of them

That is not reality, unfortunately.

If you're saying that markets do not move on information alone and then several sentences later saying that serious investor _do_ let this type of information affect them? Looks suspiciously like self contradiction.

And I'll bet the WSJ has always done this. Pick up an issue from 1950 and see if it isn't tying current news stories to the market. It was the same then.

This seems to me to be another version of "things were so much better way back when and now it's all garbage"

But I'll bow out. I didn't RTA. Just found your comments popular yet (to me) seemingly uninformed.

> If you're saying that markets do not move on information alone and then several sentences later saying that serious investor _do_ let this type of information affect them? Looks suspiciously like self contradiction.

I think that your definitions of 'serious investor' are divergent.

* Just found your comments popular yet (to me) seemingly uninformed.*

I do this for a living, and I was watching the market movements for this particular event-- the Obama speech was not the true catalyst.

"uninformed" in the sense of failure to understand the role of media. Not uninformed in the sense of failure to read easily digestible pieces of the market.

All media (that I know of) have engaged in a mix of news, speculation, and opinion for my entire life -- and probably centuries before I was born.

This article seemed to me so much like restating the obvious that I was very underwhelmed.

And BR is saying that he is moving WSJ from "essential" to "infotainment" pile, so you're not particularly disagreeing (ISTM). BR's point is that in the past, WSJ wouldn't indulge in this kind of speculation outside its opinion ("cartoon") pages.

> Without RTA

The article shows that bank stocks were unaffected; the downturn was in commodities. Hence, even as speculation it was worthless.

Uh...this isn't political. We're hitting the financials with these rules. Being political would be saying that it's a bad thing. This will hit the certain bank profits, so they are among the sectors that took a negative hit yesterday. The little article summary says "pulling down bank stocks", so the blog entry's diversion into commodities is irrelevant.

I think the proposal helps explains the drop in GS. The Volcker rule is going to put a dent in GS proprietary trading desk activities. It might have even a bigger effect on BoA, as a large percentage of their profits were from trading...

For an even clearer demo of the proposal's effect on prices, look at this chart comparing three banks with huge trading operations and three more regional banks that won't be affected by the proposal. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

The Wall Street Journal since Murdoch, with pretty graphs:

http://www.journalism.org/node/10769

so I guess the new york times jumped the shark too?: http://www.nytimes.com/2010/01/22/business/22markets.html

Almost every news organization has had the same headline today

I'm not sure NYT had quite the same reputation for reliable market reporting. While it may have been better than papers for whom this is "business as usual," NYT didn't have as far to fall as WSJ did.

if the NYT were a business and financial publication with a long history of levelheadedness and fact-based reporting, then yes, they would've also jumped the shark.

It's not like there are alternatives. The Times has let blatant editorializing sneak onto the front page and throughout every section for as long as I've been reading it, and its the paper of record. Read The Economist.

> Read The Economist.

The Economist produces good content, but it's all editorializing, all the time. Articles aren't even attributed to their authors - they just spring fully formed from The Economist's notional forehead.

That's my biggest criticism of the economist, that the content is not attributed to any author.

I love the content but it's kind of a bizarre approach to journalism to keep the authorship anonymous.

I can't imagine what their rationale is or why their obviously sharp staff stands for it.

http://en.wikipedia.org/wiki/The_Economist#Tone_and_voice

The articles likely have multiple authors that contribute to making them high quality and very concise. Nothing I read comes close to The Economist, so whatever they are doing, I works well. Also, being much more expensive than other magazines, they can afford to hang on to talent when others are shedding it.

The downside is potential for groupthink, which was clearly in evidence in the run-up to the Iraq War, which The Economist cheered on alongside the rest of the mainstream media.

Fair enough, but I think you pretty much have to read all news with an eye toward that outlet's particular editorial slant, and I'd just as well have editorializing upfront with the Economist instead of under the guise of being purely impartial.

Even when I don't agree with them, it's always an enlightening read.

Absolutely. I love the Economist in its way, but just for once I'd like to see them write an article where they admit that they don't have any idea what should be done.

That's what's so great about it. I don't want the author(s) of an article to reinforce a particular personality, as seen in so many other papers/magazines where the writers are trying to build a public brand around themselves. I find no difficulty in separating the reportage from the editorial viewpoint. That element is always present anyway, and I'd rather have it clearly articulated.

Yup, but at least they're blatant and out in the open about their editorial slant (pro-globalization). They don't pretend to be "impartial".

Investor's Business Daily is a good alternative to the Journal.

I appreciate all of the data they include (even if most of it is processed using their proprietary metrics), but their articles aren't so great. They seem to take the attitude that articles are just filler - they rerun articles pretty regularly. But their data is extensive and relevant.

In this case I really hate to say I told you so, but I cancelled my subscription the day the Murdoch deal was done precisely for this reason.

I was a daily reader since 1977. It was an awesome paper for investors and business folks with a clear line between the editorial content and the remainder. Even the editorial page always published opposing views.

It was interesting that when I cancelled, the lady I spoke with me told me that under the new ownership it was going to be free, which was irrelevant to me. She mentioned that many said the exact same thing, $100/yr. was peanuts for such a high quality tool of the trade.

I recommend Bloomberg online for reasonable quality and good numbers.

This judgment comes several years after the fact.

Its only been 2.5 years since he bought it. And it was awhile after that it started changing.

I know some people who would put the date as far back as 2002, the year they unintentionally created a certain, unfortunate class-warfare neologism.

http://en.wikipedia.org/wiki/Lucky_duckies

But that was in an editorial op ed piece. Their op ed pieces have always been political, but they always used to do a good job to make sure the politics doesn't leak out from there.

This is just an ad hominem attack as far as I can see. He links to two things to support his point but neither actually do

1. "Boskin's Obama Crash" But when you follow that link you find the article he was pointing to was an opinion piece so it doesn't support his point (which was that he'd always thought the OpEd page was crazy but that he now feels that's bleeding into the reporting)

2. "New Bank Rules Sink Stocks". His problem with this article, in his own words, is "we know that day-to-day action is mostly nonsense". He goes on to say "Assigning a definitive causative factor is at best a guessing game, at worst an exercise in futility." That's just foolish. There are brokers on the trading floor, you can ask them why they're selling and every news outlet reported it was because of proposed banking regulation so the logical assumption was that there is an overall sentiment on the floor. This isn't the WSJ. ABCNews, BBC, et al. reported the same thing (http://blogs.abcnews.com/theworldnewser/2010/01/dow-drops-20..., http://news.bbc.co.uk/2/hi/business/8473720.stm)

This is a really, really naive response. There isn't really anyone on the trading floor anymore. ECNs have taken over, and account for 97% to 100% of trading volume on any given day. No one trades from the floor anymore. So no, there's no group of people who are "the market" whom a reporter can poll for sentiment. You are completely and utterly wrong, and the only data you cite in support of your opinion is the fact that lesser outlets--outlets of the type that Ritholz has already said he files under "infotainment"--have glommed onto the same bogus explanation and run with it.

Ritholtz knows more than you will ever forget about what moves markets. He is spot-on, here.

Well first, and I mean this with minimal disrespect, but you clearly have a hero worship thing going here (see your last sentence). So you really have a bias of your own.

On your point, there are still people on the floor if you don't believe me turn on CNBC and you can see them. But even in a virtual floor it isn't like people don't keep in contact. The market lives and dies by social interactions and it always has. That's why the guy on his computer using e*trade isn't as effective as the guy in the brokerage house.

The point still remains that every news institution I can find reported this the same way (Dow drops because of Bank Regulation). So using it to attack the WSJ individually is ridiculous.

The point remains that the WSJ was unique in providing rock solid objective financial journalism, and now it is sliding down to the same level as "every other news institution".

But that's only true if the facts aren't true. If the Dow did really fall because people are worried by the new regulations than the title isn't sensationalist it's just factual reporting. So the question is this: Was it impossible to find out the motivation of investors? I don't think it is (especially when you have big time investors like Warren Buffett coming out against it)

Granting Boskin an editorial is a problem because he was a direct cause in the financial collapse, and it was a followup to a few other posts he'd made.

There are brokers on the trading floor, you can ask them why they're selling

Traders on the floor and in the pits trade in reaction to price, not the news. News can be bad and price still go up-- just watch the futures market when jobless claims are reported in the mornings...

The author basically retracts his point here:

http://www.ritholtz.com/blog/2010/01/wsj-another-view/

No he doesn't. He provides nuance, as follows:

<blockquote> This isn’t a politicization of the Journal, it is more accurately described as a tabloidization of it.

....

I am willing to give the Marketplace and Money & Investing sections the benefit of the doubt. But it seems weird to me to say that I am now sequestering the OpEd pages AND much of the A section. Once the political motivations of the owner leave the Opinion pages, it is a slippery slope down towards yellow journalism. </blockquote>

I think "retract" would be an overstatement.

As a long time reader of the WSJ, it definitely has become a Fox-ish paper under Murdoch. What's tragic is that right now the investing public's need for objective, non-politicized, long-term financial information has never been higher, but now the primary journalist institution is no longer providing it.

I cancelled my subscription a year ago because of this. It's really a shame too, as it was one of the best papers out there. The frontpage always had one really interesting article and the rest(barring the op-ed) was really solid reporting.

I think people are dramatically overstating the degree to which the WSJ has increased its political content. There's a slight swing, but I believe people's perceptions are exaggerated because of what they expect from Murdoch.

I also think it's rare to talk about economics in a way that's free of political bias. I think most of the time the bias is just subliminal, and people are more likely to notice on WSJ at the moment due to Murdoch.

The bigger problem for me with the WSJ is that it seems to include more and more "soft" economic news (lifestyle, human interest, etc) and less "hard" news. I don't have hard data on it, but it feels that way. Could be my own version of Murdoch awareness.

The reason I canceled my WSJ subscription had nothing to do with ideology. I used to read the WSJ for the in-depth stories about topics that aren't necessarily in the headlines right now or that are otherwise not especially mainstream. After the Murdoch acquisition, the WSJ has increasingly focused on shorter stories about more populist topics. I can get that anywhere, so I no longer have a reason to read the WSJ rather than any other paper out there. I'm sure many others feel the same way.

The article boils down to one thing: "Obama is floating a bill the author likes. The general consensus is that the reason the market is down is BECAUSE of Obama's bill. The WSJ dares to report that the market is down BECAUSE of Obama's bill. Therefore the WSJ is are a bunch of no-good right-wing authoritarian fascists, and I'm going to stick my fingers in my ears and pretend that they don't exist".

My comment (above) has gotten three down votes in 5 minutes.

Has anyone READ the article?

I think that my summary is dead-on accurate.

If you disagree, please post WHY you disagree.

Nice.

Two calm comments of mine, both down voted to 0 or lower.

...and yet someone making no points and calling names (below) still has a positive score.

You down voters ought to be ashamed of yourselves - this is a marketplace of IDEAS, and yet you're just lashing out. Very mature. Very much in the spirit of HN.

can you point out in the article, with quotes, where your ideas are validated? i read the article first, read your comment, and then re-read the article and nowhere do i see any support for your summary.

the only thing i can imagine is that this article doesn't line up with your own personal belief system, and you're violently rejecting it.

Re-read your comment, and I don't think you can really classify it as 'calm'. It clearly shows your political motivation, the same as you accuse the author.

Your comments are not calm, they are flamebait; and your opinions don't appear to have any connection to the actual article, in which the author describes specific reasons why he thought the Journal's coverage was poor (e.g. their failure to distinguish between financial and commodity markets, their failure to mention China's announcement.)

I think the downvotes have more to do with people not wanting to see baldly political rants. The article was about the Wall Street Journal. You replied with an off topic ad-hominem about the authors motivations and intelligence. Bad form.

Technically, the article is about the politics of the WSJ, and the poster responded with a comment on the author's politics.

You can't talk about politics without talking about politics.

Technically, the article is about the quality of journalism in the WSJ (plus of course the impact that politics has had on that quality), and the poster responded with a comment on the author's politics and completely ignored the issue of content quality.

You can't talk about journalism by talking only about politics.

I didn't down vote you but I think people are disagreeing with your interpretation of the article. He made it clear in his article that he dislikes both sides. And from his previous articles, I believe him. He doesn't limit his attacks to just one party.

I'm sorry but this is bull. The man dislikes both sides but he disagrees with the right and thinks the left didn't go far enough. That's not the same thing.

In a slate profile (http://www.salon.com/news/feature/2009/04/16/cassandras/inde...) he's listed as disliking the stimulus because it wasn't big enough and wanting the banking system nationalized. Without passing judgment on the merits of his philosophy the man is clearly a leftist.

And here he's calling Obama a sellout or close to it:

http://www.ritholtz.com/blog/2009/12/did-obama-sellout-to-wa...

That just makes my point. Follow me here...

The original comment was saying "this guy is partisan and that's why he doesn't like the article".

You tried to refute that by saying "He dislikes both sides"

I'm saying he doesn't really dislike both sides. He dislikes one side and agrees with but is disappointed in the other. Those are vastly different things.

Yeah, I see your point.

I probably shouldn't have said, "He dislikes both sides" when I should have said, "He attacks/criticizes both sides." My intent was to show he's not some blind partisan hack.

I'm not sure if he's a leftist either. Some people accused him of being a libertarian in the past.

I disagree because:

1. Your summary of what the article "boils down to" includes this: "The general consensus is that the reason the market is down is BECAUSE of Obama's bill". There is no such thing in the article.

2. The article suggests reasons to think that the reason why the market is down is not "BECAUSE of Obama's bill". You neither mention these reason nor offer any objections to them. (The reasons are: (a) the market is noisy enough that typically day-to-day movements are mostly noise; (b) there is another good explanation for the market drop, namely China's recent doings.)

3. Your summary of the article includes this: "the WSJ is are a bunch of no-good right-wing authoritarian fascists, and I'm going to stick my fingers in my ears and pretend that they don't exist". The actual article's complaints about the WSJ's politics don't include anything about authoritarianism or fascism, and the author says not that he's going to pretend they don't exist but that he's not going to take them so seriously any more.

4. You offer no evidence of the alleged consensus, no indication of whose consensus it is, and no reason to think that the alleged consensus is correct.

I think you need to re-read the article. Your 'general consensus' could be phrased better as 'general media consensus', in my opinion. The author's point was that you cannot clearly establish causation in the market, and that there could be numerous reasons for the drop and he presented several other potential causes, and that analysis of segments of the market did not really correspond to the Obama announcement as the main cause. I don't think he outright rejects that it may have had some impact.

In general, what I take away from the article is that the tone of the Business section of the website used to be just 'business', and that you could expect clear analysis. He no longer feels that is the case, and as such, the WSJ is becoming more just another 'general media' outlet, and not as special as it once was.

But the market wasn't down because of Obama's bill.

Did you read the whole thing? The biggest losers were commodities, not banks. Many banks also just reported quarterly losses and signs of continued economic trouble. The "general consensus" is what it is because of sloppy reporting like the WSJ provided.

Go look at the financial sector over the last month--it had a big spike and is now back to where it started. Then look at how closely it tracks the S&P 500. Banks are actually doing a little better, but it's tracking quite closely. There's a lot more to why markets move than proposed new regulation on banks.

http://www.google.com/finance?catid=58211593

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