Debits to Dow Jones and Bloomberg for being a bit too rah-rah after a big stock rally on Tuesday. In these pieces, which appeared the same day of the rally, there’s too much short-term Wall Street think and not enough common sense.
Dow Jones quotes an analyst in the second graph who talks about “healing.” Bloomberg has a quote in the third graph about the market “getting a little more comfortable that the crisis is over.” These quotes are up high and not sufficiently contextualized.
Compare this to the The New York Times, which in another same-day story keeps its head. Its piece, by Michael M. Grynbaum, starts with a reminder that Wall Street has its own bizarre rules under which up can be down and then has a nice and cautious quote from a now-repentant bull in the fourth paragraph:
”Nobody’s kidding themselves,” said Ed Yardeni, the investment strategist. “The financial crisis isn’t over.”
And though some observers will take Tuesday’s rally as a sign of recovery, this type of investing strategy does not have a good track record…
Last fall, as Citigroup became one of the first Wall Street firms to acknowledge its mortgage-related assets had lost billions of dollars in value, markets rallied in the hopes that the worst was over. The Dow has since fallen 11.6 percent from its October high.
Perspective: we like it.
So name one
A Debit to The Wall Street Journal for a Thursday article on how some value funds, which pride themselves on prudence, have been experiencing losses on par with their more unapologetically rash colleagues:
When the technology-stock bubble collapsed, ‘value’ managers smugly tsk-tsked, saying it would never happen to them because when they bought a stock, they understood the business model. Now, some value funds are posting losses rivaling those suffered by go-go ‘growth’ funds in 2001 and 2002, thanks to hits to stocks whose earnings were inflated by the real-estate bubble.
But the Journal never tells us by name which value funds plummeted. We only hear about funds that steered clear of disaster. Why not air a little dirty laundry?
A story about funds getting caught in the housing bubble should include at least one.
Good local reporting—from India
Credit The Atlantic for letting reporter Robert D. Kaplan wander around Calcutta and tell us what he saw. The piece might surprise you: It’s as much about a rising, upwardly mobile segment of the population as it is about the poor.
Kaplan has a strong reaction to this economic divide, made more glaring by the close proximity of rich and poor: “Calcutta is, frankly, obscene.”
Why? Take this example: “1.5 million poor Calcuttans live within a few feet of air-conditioning, even as they will never experience it.”
But Kaplan also warns us not to only see what we have long been trained to:
too often, our Western fixation on the visual brutality of its poverty has obscured its harsh, unsentimental upward mobility.
Kaplan doesn’t ignore either aspect of life in Calcutta.
More from off the beaten path
Continuing with the shoe-leather Credits, we liked a NYT’s piece on the resurgence of silver mining in Idaho.
With the real-estate market down and prices of silver up, William Yardley reports, “Miners are feeling less like fading local color and more like the backbone of the local economy.”
This situation might not last, of course, but it is a testament to the idiosyncrasies of the uneven process of de-industrialization.
Too easy on boards
A Debit to the Journal for George Anders’s column Wednesday on the staying power of bank boards despite the credit debacle, which so many of them failed to foresee. Anders lets them off way too easily.
But even though shareholders in the U.S. could toss out lots of bank directors, don’t look for that to happen. A union-led effort to trace culpability into the boardroom is running into skepticism from investment heavyweights.