"Hype Machine" Or New Tool For The Smart Investor?
I read with interest your assessment of how the media contribute to clouding Wall Street's performance ("Wall Street's hype machine," Cover Story, Apr. 3). I closely monitor international market news, and I concur with your critique. But I wonder how the media feel, now that they are in the hot seat--with your article slicing through their performance, much like they do on a daily basis.
Prince Alwaleed Bin Talal Bin
Abdul Aziz Alsaud
Riyadh, Saudi Arabia
Your story banks on the notion that most investors are idiots and that the rise of the individual investor has been fueled by nothing more than media sensationalism and biased, fame-hungry analysts. What about the upside of the story? More than ever before, investors are using sophisticated diagnostic tools, culling comprehensive information, and engaging in intelligent discussions with fellow investors. And where does the article mention the independent analysts building followings who provide balanced buy and sell recommendations?
The Web has given individual investors access to resources formerly available only to Wall Street--the people this article claims are running away with sacks of money while the average investor gets fleeced. From reading the message boards on the site I founded two years ago, ClearStation Inc., I see that our members were big-time buyers as the Nasdaq sell-off slowed down. Our members are "playing it." There is no sense of victimization or panic.
You can always find someone who has gotten soaked and make that the basis of an article. And it makes sense: At the nadir of the panic, the worst human impulses surface. But there are two sides to the story, and there are a lot of investors on the upside, thanks to a whole new generation of investor resources that cut through the hype.
Mill Valley, Calif.
To imply that individual investors are stupid and incapable of making decisions is ridiculous. The story you should be writing is about how the Internet has led to a democratization of investing. No longer is investing the domain of professional investors or the rich. The Internet has brought Wall Street tools to Main Street, giving small investors access to multiple perspectives. Individual investors can even "virtually" attend investment-banking conferences, which they never had access to before. Investing is by no means a sure thing, and there are inherent risks resulting in winners and losers. Highlighting some of the inevitable losers does not reflect the positive side of investing online.
CNBC is to investing what professional wrestling is to sport. It's entertainment, not research. A novice investor hoping for returns should quit watching television and start reading. Then the approach should be to "get rich slowly." I've been investing for 16 years and the only thing I've seen happen quickly is people losing money. Over that time, I have turned my initial $5,000 investment into more than $1 million, mostly buying out-of-favor stocks and holding them until they are back in favor.
The dot-coms say earnings are not important; they are going for market share. Any third-grade lemonade stand operator knows better than this. Ever heard lemonade-stand operators say they're in it for market share, not profits? You are investing in a company to make a profit on your money, so why should you invest in a company with goals different from yours? They are using your money to accomplish their goals, and they get a salary from it.
The small investor can make money in the market, but not by watching CNBC or following brokerage house recommendations. Learn to do your own research using facts and independent opinions. Know 10 companies very well and invest in the best five.
James P. Ardrey
Your article was correct in identifying the abuses but failed to offer some effective remedies. Here are some suggestions: (a) all commentators should have their personal portfolios displayed whenever they are on screen and commenting on a stock, since tone and body language are often used to promote or punish stocks; (b) all analysts should have a box displaying their holdings and whether or not they have been buying or selling in the past 10 days; (c) all persons making market predictions should have a box showing their last three forecasts, when they were made, and the accuracy. If major league sports have the ability to display such information instantaneously, it shouldn't be too much of a burden for financial programs to do the same. Or don't they want us to know?
James Gardner, CEO
Newport Beach, Calif.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Morgan Stanley Says Stock Slide Was Appetizer for Real Deal
- U.S. Stocks Fall With Treasuries, Dollar Climbs: Markets Wrap
- U.S. Pays Up to Auction $179 Billion of Debt in a Span of Hours
- Tech Lifts U.S. Stocks as Treasuries Fluctuate: Markets Wrap
- Florida Teachers’ Pension Fund Invested in Maker of School Massacre Gun