BusinessWeek Investor -- The Barker Portfolio
How Timely Are the Tube's Tips?
Investor shows are gaining popularity, but money managers caution against making decisions based on sound bites
If my kids only knew just how many workday hours my office television stays on, the limits I've erected against their own TV time would collapse like the Berlin Wall. It's not Nickelodeon I'm tuning in, but CNBC and CNN, this bull market's dueling cocktail parties, where stock tips get passed around like so many canapes by show-hopping portfolio managers.
Informative and often amusing, investor shows on these and other channels keep growing in popularity. But watch enough and you'll find yourself wondering if you aren't making your own portfolio woozy. Even Stuart Varney, co-anchor of CNN's Moneyline News Hour, sees the danger in fund manager talk on TV (and in print or online, for that matter). "Are they hyping a relatively small, unknown stock because they've already got it in their portfolio and they'd love to see others go out and buy it to get the price up?" he asks. "Think about that."DIFFERENT TIME FRAMES. So I set out to ask some of TV-land's most familiar money managers a few basic questions. None, naturally, confessed to giving viewers anything but their best investment ideas. Yet some see how other guests might lead viewers the wrong way. That can happen if only because pros and viewers "may be trying to achieve different things in different time frames," says Bruno Cohen, CNBC senior vice-president of business news. "We try to point that out fairly frequently." But knowing just where a talking head is coming from can be tricky, as you'll see from their answers to my questions:
-- Why spend time on TV? Strong Enterprise Fund's Andrew Cupps, whose 117% 1999 return makes this 29-year-old the current It Boy, answered this way: "We have a business to build, just like a plumber." In other words, "to get share of mind, to get share of wallet," moneyman/TV talker Mario Gabelli told me. "Never underestimate the importance of ego," Holland & Co.'s Michael Holland said. Point venture capitalist Roger McNamee of Integral Capital Partners put it a bit differently: "My mother, my mother-in-law, and my wife all love seeing me on TV.... There's so much nonsense. I try to be a voice of reason." Besides, he added, "it's really fun."
-- What good are stock tips on TV? Liz Ann Sonders of Campbell Cowperthwait/U.S. Trust is way ahead, up 49.2% through October, in the annual stockpicking contest among panelists of Wall Street Week With Louis Rukeyser. One big winner: Oracle. Yet she recoils at the idea of viewers acting on TV tips. "It's an inappropriate way for investors to go about running their own investments," she said. "Be careful in making investment decisions off of a 20-second comment from a portfolio manager who doesn't know anything about your own personal situation." Holland, though, thinks the tips can be worthwhile, especially the rarer words of caution: "If someone says a stock is overpriced, I pay attention."
-- Are you still buying stocks you recommend? Some said no, including Sonders and Barbara Marcin, who left Citibank this year to run the Gabelli Blue Chip Value Fund. "If I talk about a stock, it means that I own the stock as much as I like already," she said, adding she still sees lots of upside for those issues. Yet Albriond Capital Management's Alan Bond doesn't limit himself to talking about his own portfolio. "I don't really subscribe to the `get long, get loud,' theory," he said. "There are sectors of the market where I don't have exposure, but I think there are some great stocks." He'll talk them up, and maybe buy them after any market flurry settles down. McNamee said he even discusses his current buy list. "Why not?" he asked. "You should always tell people exactly what you think, because with most people, their egos are so big that they'll just assume you're lying."
That double-gainer-with-a-twist remark left me scratching my head. But if McNamee is right, it means many investors aren't taking TV tips as gospel. The subject may be money, but at day's end, we've figured out this is entertainment, too.Questions? Comments? E-mail firstname.lastname@example.org or fax (321) 728-1711By Robert BarkerReturn to top