The trend Nocera identified was only beginning. In 1994, Americans had indeed moved en masse into mutual funds, but kept nearly as much in bond and money funds as stock funds. But by the end of the 1990s, the public had $4 trillion in stock funds, compared to only $808 billion in bond funds and $1.6 trillion in money markets. At the turn of the twenty- first century, nearly half of all Americans owned shares in one form or another. Maggie Mahar, in Bull! A History of the Boom, 1982-1999 (published in 2003 and essentially a grim bookend to Nocera’s optimism), uses polling and other data to show that most middle- and lower-income Americans who owned stocks in 2001 only started buying them after 1996. Of households with financial assets of less than $25,000, an alarming 43 percent made their first stock purchase in 1999 or later—and almost certainly lost money.
While it is reasonable for the business press to have adapted to this changing investment landscape, its emphasis on the stock market was almost certainly overdone. According to a 2010 paper by Edward N. Wolff, a New York University economist, about half of American households indeed own stocks in some form, but only 18 percent owned shares directly as of 2007, and thus could conceivably benefit from CNBC-ized financial news. Only 22 percent of households owned stocks worth more than $25,000 in any form (including mutual funds or pension accounts), and stocks as a percentage of total household assets were only 16.8 percent. (Of course, stock market wealth was skewed toward the wealthiest 1 percent, which held nearly half of stocks and mutual-fund assets; the bottom 90 percent held 10.6 percent.) What’s more, global debt markets are roughly twice the size of the stock market, and, as Gillian Tett noted in her book, Fool’s Gold, they receive scant attention from the business press.
In any event, CNBC and its market-focused competitors rose to serve the growing ranks of amateur investors. Consciously modeled on ESPN’s SportsCenter, CNBC programming consisted of pre- and post-“game” reports, along with in-game interviews—the game, of course, was the trading day. Viewers got a sense of connectedness to the inner workings of the financial system. During trading hours, a ticker streamed price changes of shares and indices. CNBC has done some fine documentaries over the years, but they are hardly the main event.
These days, the ticker includes such esoterica as the spot price for West Texas Intermediate crude oil, a light crude refined mostly in the Midwest and Gulf states, as traded on the New York Mercantile Exchange, “WTI/NYMEX.” Here is news fragmentation carried to some postmodern extreme. But, really, it’s nothing more than messenger-boy journalism digitized: old wine in a new bottle.
As Howard Kurtz recounts in Fortune Tellers (2000), a major preoccupation of the network involved winning deal scoops and getting early word of Wall Street stock analysts’ buy-and-sell recommendations, a task at which Bartiromo proved particularly adept. The network played a big role in elevating a few analysts to star status—Goldman’s Abby Joseph Cohen, Merrill Lynch’s Henry Blodget, Prudential’s Ralph Acampora. “Abby says the market will go up; Ralph says the market will go down,” CNBC personality Ron Insana intoned in 1999, as quoted by Kurtz. “The tug-of-war of titans.”
In its own eyes, CNBC saw itself as a force for the democratization of finance. Its executives claimed their mission was to provide everyday people the same information as that available to professionals. By the end of the ’90s, as the tech-heavy NASDAQ stock index roared from 450 to more than 5,000, CNBC had attained an influence far beyond the size of its viewership, which has bounced around the 250,000 range for years, a fraction of the circulation of the Journal. Celebrities like Regis Philbin, Charles Barkley, and Andre Agassi declared themselves fans. Joey Ramone wrote a song about Bartiromo (“What’s happening with Intel? What’s happening with Amazon? I want to know … Maria Bartiromo”). Print journalists trooped to CNBC’s studios in New Jersey to proclaim its cultural ascendency. “The Revolution Will be Televised (on CNBC),” said Fast Company, in an 8,000-word story that called the network “the live feed of the new economy.”
Interesting idea, Dean. I wonder how it fits in the FONosphere though, given the idea, near universal, that anything other than market-actionable "scoops" are a generalized commodity, worth nothing at all.
Also, you call Pearson PLC's $160 million expansion, which gained the company 91,000 new readers, "a success." Really? At $1,700 per?
#1 Posted by Edward Ericson Jr., CJR on Tue 10 Jan 2012 at 03:56 PM
Dean - if M&A reporters jobs is to cozy up to dealmakers to get deal term scoops 1st (so readers can trade off it) than isn't the reporter just working for a few on Wall Street and not the reader. AR Sorkin's fail was to warn that any of those levered up 05-07 PE deals might also mean a fail for PE investors when the credit bubble burst. I didn't see Sorkin doing his main street investor readers(most of NYT Biz readers) any service by promoting his banker sources deals with out a few warnings on how the deal terms might bite shareholders in the rear.
#2 Posted by Teri Buhl, CJR on Tue 17 Jan 2012 at 01:17 PM
Most financial reporting can be summed up in a single word - "infomercial".
#3 Posted by Hugh Akston, CJR on Sat 21 Jan 2012 at 02:03 PM
Dean,
Quite agree. However there have been a few voices crying out in the wilderness. \
For years reporters have been pointing out that the rating agencies in the USA were corrupt; the companies being assessed are paying the rating agencies. Also the press pointed out the conflict of interest that Paulson had being a Goldman Sachs loyalist and yet working for the administration in the last crash. But the tank just keeps on rolling. Why? Most of the financial reporters are New Yorkers and steeped in that culture; accepting of Wall Street and its mores and unable to cast a critical eye over it. Like the money honey from Brooklyn, they just tell it how it is. Actually getting stuck into Wall Street is not on their radar. To get a good and aggressive business press, I suggest using more aggressive outsiders e.g. Harvard economics professors and Stanford experts too. It was a Stanford academic, a doctor with alzberger syndrome who finally worked out the mortgage CDO plot by going over k10 reports from 1 am to 5 am., according to a long piece in Vanity Fair.
But why did the press allow Pres. Clinton to abolish the Glass Steagall Act without a word? I think Americans are too much in awe of the office of President and the 'sacred' Constitution. Ridiculous. Clinton was a flawed as the rest of us. He only did it to allow the merger of Travellers and Citigroup( making along the way former Travellers CEO Sandy Weill rich beyond the dreams of avarice).
#4 Posted by Pamela Griffiths Clark , CJR on Tue 21 Feb 2012 at 07:51 AM
Hugh Akston called financial reporting an “informercial.” So it’s not really reporting. The financial media is now a trade publication, not journalism. They repeatedly interview propagandists (from Koch funded groups). It would be nice to have journalism.
Even the MSM now functions as press agent, he said she said, race barkers, and gotcha, rather than journalism. The media tells us we live in a globalized world, and then their Wall Street owners cut out investigative reporting and foreign correspondents.
Journalism is closely related to science. Throughout history, the arts and sciences have often been supported in some way by the state. They and journalism are essential public services that the market does not always support. (The cure for bad science is more science, for bad journalism is more journalism, etc.)
Successful nations have always managed their affairs and pursued their interests. Our important use of the free market is only one function. Laissez faire theory, that we should have ONLY a market, has no support in the historical record. “You can’t pick winners” is also false. Many technologies and products started with some gov’t support. We need both public policy and private entrepreneurship in a free market. A public private partnership may be needed to create business journalism.
On the issue raised by Pamela Clark, in the 1990s, the mantra of Republicans and Texas Gov. Bush was self-regulation. We saw how that worked out. Regarding deregulation under Clinton, since we do not have public funding of elections, another essential, Democrats serve business. They agreed to deregulation because the banks were doing so well, and the deal was that there would still be adequate regulation. They had no way to know that Bush/Cheney would run an orgy of deregulation, due their appointees. (Some states tried to regulate the growing subprime mess and were block by the Bush administration.)
Recall the other deals that Bush violated?
(It wasn’t a war act, it was a war powers act. Hank Paulson would not need to use what he called his bazooka if we gave it to him. Limit CO2 and other similarities to Gore. Be a uniter, instead of appointing extremists.)
#5 Posted by Harry Thorn, CJR on Thu 8 Mar 2012 at 10:15 PM