Jim Cramer on the Foibles of Business Journalism
My colleague Jim Cramer, host of Mad Money and stock commentator extraordinaire, gave a rocking speech to the Society of American Business Editors and Writers.
The speech praised a little and prodded a little. And it was well-received, despite the fact that Cramer isn't always the fave among more old-school business journalist types. I blame the soundboard.
So I thought I'd post it for general consumption as a tip of the hat to Mr. Cramer (and yes, to hype Sabew a bit, since I'm on the board). Now, he did ad lib a bit, so the draft below lacks the total feel. But you'll get the gist..........
First, thanks so much to our SABEW hosts . I am thrilled to be here on this 50th anniversary night and I am proud to be amongst the best of the best of our profession.
When I first learned of this opportunity, I was beyond excited to be recognized by my peers. But as I thought more about it, I realized, wait a second, this is like the Academy awards where someone who has never won anything is honored at the age of 58, it must be beion because he's so old he must be on the verge of retiring!!! But I am not going anywhere.
What I would like to do tonight is to give you my view on the state of business journalism today, the arc that I have seen occur, the need we fill, a critique of the quality of reporting and writing in the context of new and even newer media and a sense of where we are going from here.
First, as now appears obvious but was anything but in 1995-1996 about the time we started thestreet.com, the web changed business journalism in so many ways that there truly is a B.W. and A.W.; before web and after web. For us in this room, I think the web's been a decidedly mixed blessing. On the one hand we seem to have the greatest proliferation of business journalism outlets in history. Outfits like Seeking Alpha, Business Insider, thestreet and so many others would not exist without the web. The portals' origination and reverberation of business journalism on the web has allowed for a tremendous pervasiveness to occur. Business journalism is everywhere and just a keystroke away. Facebook and Twitter specifically and social media in general have taken an important step further, maybe the most important, although the sponsorships available in social media could be worrisome. You can now personalize the web it and just look at the stories that pertain to your stocks, or you can get excellent commentary on anything business from any device. I have you all in my phone.
So what's mixed about that? Well, you know that at my old hedge fund in the 1990s I used to get papers from dozens of towns hand delivered to look at their business sections to see what local publicly traded companies might be up to?
Now you wouldn't bother and not just because the web obviated the need for the hard copy. Most of the smaller papers in this country no longer have a business section, and instead just have a business editor. I know because at thestreet we have a business desk that helps produce copy for dozens of papers because they can't afford to have a business staff or even a person to report on business. Put simply, this is a horrible development because there are thousands of publicly traded companies that used to be covered locally. It wouldn't matter, perhaps, if Wall Street covered them. But Wall Street's research departments have been cut back dramatically, too, not that the objectivity was ever there, but still there is often no scrutiny whatsoever for the vast majority of publicly traded companies beyond what their internal p.r, and i.r. departments put out.
The press used to play a vibrant role in trying to cover companies in an objective and at times investigative way. That's out the window for so many companies now because of the exigencies of declining newspaper budgets.
Unfortunately none of the national media outlets can afford to cover these, either, although Dow Jones, Reuters and, Bloomberg do their very best and the cable business news stations attempt to be as broad as possible, too. That said, only a handful of shows, do report much on companies with market capitalizations of a billion dollars or less. We try on Mad Money but we do not report on any companies smaller than $500 million for fear of impacting their stocks. There's just not enough interest from the viewers and not enough money from the point of view of the publishers.
I don't see that changing any time soon. Sometimes I wish we could simply divvy up the business universe in this room and agree that each of us has to cover at least a handful of the 1000 largest publicly traded companies in more than a cursory way, as these companies impact so many people, but there's no way to mandate coverage.
Nevertheless, I don't want for a minute to have that lamentation color my thinking on what I believe is still a fabulous moment for business journalism given the plethora of national outlets and the competition that breeds.
Where do I think we are doing a great job? First, I find the coverage of Washington and business is superb. I remember when CNBC used to have a barely-watched Capitol report each morning. It was well before the market opened so no one watched us then anyway, so it was safe to deep-six.
Now I think that the scrutiny with which the various outlets covers Washington is genuinely superior to any other time I can recall and the systematic budget cutbacks our industry faces and faced during the Great Recession led to no compromises of any great magnitude when it comes to the Federal Reserve, congress, and the executive branch.
The fed coverage, in particular, I find to be outstanding, sophisticated and rigorous and makes the fed more accountable than it has ever been. The days when William Greider, a towering journalist, represented the only real investigative force into the fed have long been gone replaced by a phalanx of the best we have, chronicling and analyzing even the most minute aspect of the unelected fed and its vast powers.
The coverage of the Congress and the president during the Great Recession and then again with the fiscal cliff and the sequestration, as well as the interrelation with our international trading partners has, again, been outstanding. I can't believe how, at a time when so many traditional outlets have scaled back coverage of international events, we as a group have stepped it up in a major and incredibly informative way. I am repeatedly surprised positively on the seamless integration of foreign and domestic news and the recognition of how intertwined we are, even as the news itself is not necessarily what the audience wants or is the most popular topic to cover. As we now say, reluctantly, it doesn't have the pageviews. But we do it anyway. That's a testament to terrific judgment by our editors and reporters on what's moving the markets and impacting peoples' lives and why. These are difficult topics and yet I think they are explained in an everyday plain English way so that even the less financially literate can make good judgments about them and their impact on their jobs and their well-being.
I know we struggle over this on our 9 a.m. Squawk on the Street show where I am acutely conscious that our viewers' eyes glazed over in our wall-to-wall coverage of Spain, Italy, France and Germany, oh, and Cyprus, Japan and probably Portugal Monday. But the internationalization of our businesses, markets and economies demand that kind of attention.
Okay, enough backpatting. What do I think we can do better at? First, I find our coverage of individual companies to be not aggressive enough. We are quick to immerse ourselves in all things political. But we do not spend enough time on what individual companies do or how their stocks perform. Or we overdo some companies, namely Google, Apple, Yahoo, and right now JC Penney, JC Penney, has anyone even shopped there, I did, to buy a pair of trousers, and I use the word trousers because that's the word my late mom used which is the last time I know anyone went there. We do this at the expense of many other companies that could benefit from our scrutiny and that could benefit our viewers and readers far more than just the war between the parties over the budget.
And when we do cover them we don't do it from enough perspectives. For example, the Obama Justice Department's Anti-trust division is incredibly pro-business and has frequently blessed what I regard as anti-competitive, anti-consumer mergers, particularly in the airline and rental car industries but you rarely see that kind of critical coverage. Not many are saying anything about all of us who pay more to travel than ever because of these mergers, or will pay a higher price for beer and Justice itself ended the price war that was giving working people perennially cheap beer, something that's supposed to be near and dear to the journalists in this room, and we don't even flag their stocks as beneficiaries of a Justice Department that is blind to oligopolistic pricing. We don't care, so maybe they think they don't need to care. This is on us, as much as them. They read the papers, for heaven's sake.
Other companies have been able to get away with outrageous behavior without anyone connecting the dots between management and these actions. We have not covered the misdeeds of the individuals who run the big banks in such a way that they could be targeted by the government themselves, and instead have coverage that tends to be critical of the institution itself. I think that has led to the unfortunate situation where companies are pursued and not the individual wrongdoers, who get away scottfree. Where are the indictments? No one has gone to jail for what they did to the shareholders. To what they did to this country. That's just outrageous. The result is that the institutions defend themselves and the shareholders pay the price. I think that's outrageous. The government should be putting these people in jail which would then avoid the need for indicting the whole institution. That would obviate all the needless too big to fail worries because the institutions can be preserved if the individuals are punished. We used to see much more of that kind of activity under previous Justice Departments, but not this one. I think our coverages bear a role in this and are often as culpable as the government itself because the government responds to the press in these instances. We in this room are letting these execs off the hook; where's the shame? Where's everyone else's Wall of Shame?
It's not just the banks. We have let some companies get off with consistent bad behavior and have not given their ceos enough scrutiny for their misdeeds. For example, we rewarded William Weldon with accolades for his job at Johnson & Johnson yet I do not have enough fingers on both hands to keep count of the travesties this man presided over not the least of which are the trials now starting involving defective devices that have caused much pain and suffering that seems to have been predicted by people inside the company. Some people in journalism helped anoint this man Weldon. Is that right? I don't think so.
We need more advocacy journalism when it comes to this kind of behavior and there is a great deal of it that goes unscrutinized.
We are also missing some big stories or not covering them in a comprehensive way. The biggest one? The revolution in oil and gas in this country. You cannot get enough coverage of this important issue. I see more articles about the cons of Keystone than I care to read but next to nothing about all of the other pipelines and rails being built to move energy to where it is needed. I am not a shill for the industry but the industry is the biggest job producer and the tension between this administration's disdain for fossil fuels and the need to create jobs, and promote domestic security through continental energy self-sufficiency is rarely mentioned. That's just a huge blind spot. It may be the biggest impediment to job creation but we are silent on the discussion.
The viewers and readers deserve better. Sometimes, in my more cynical hours, I think that the story's too positive to merit as much attention as it should and the debate over the environmental effects of fracking prevails over the more important issues of job creation, energy independence and the imperative of using natural gas as a replacement for oil as a method to bring down prices and insure domestic security. Is that an innate bias speaking?
I hope not.
I do not believe there is enough scrutiny over the financial engineering and new product creation of the brokerage industry. There's not enough linkage being made to the pervasive and I believe pernicious high frequency trading and the SEC's capturing by the industry. The SEC has had a pretty free ride from the press and I find the lack of scrutiny to be perplexing. The SEC in the last decade has blessed every cockamamie financial innovation even if it is harmful or bamboozles every day investors. You need a degree in Physics and Alchemy to make some of this junk up and some of these so-called innovations should be rolled back as needless engineering that does much more harm than good. Some of these products are good for their sponsors and sponsors only not for the customers whom I think we have an obligation to protect.
Finally, I do believe that the press is not enough of an advocate for the need to have a more functional government. I know that some in this room were critical of CNBC's "Rise Above" campaign to try to open peoples' eyes, including those in government, to the long-lasting damage a divided Washington is causing the economy and the nation as a whole in what can only be described as the most partisan environment since the Civil War. I wore the Rise Above button proudly and I think we did some good. We don't check our citizenship at the door of the newsroom.
I hope all of these minor ripostes are taken in the spirit I am offering them as I think they should be debated among ourselves as I am by no means asserting that it's my way or the highway. I have ample opportunity myself to address these issues and I can't say I have necessarily done a good job on them either or that I am necessarily correct in my observations. Consider it an attempt to get the dialogue and conversation going, something that I believe is good for the profession and the commonweal.
Before in conclude I want to spend a moment on the structure of business news as it is covered on the web itself. First, I find it sad that we have, at times, devolved into being nothing more than keyword supplicants to the portals, or tricksters to the twitter feed or facebook, to gain maximum pageviews to please advertisers. The desire to be picked up by them in order to obtain pageviews that can be monetized is a difficult reality, and one that is only getting rougher as we migrate from desktop to mobile, where the cpms are even lower. The fact that I have to interject the term CPM at a SABEW conference is most telling. But by being slaves to the portals we often fail in our mission to cover all but the hot companies of the moment. Outfits who trick the system for pageviews denigrate the efforts of all the rest of us. And you know who you are.
Second, we all have to face the fact that to monetize ourselves we now have to be willing to be on air journalists, each person required to tell the story on video , not just write it, as for the moment, the ad sales people can get in more ad dollars than with just the written word. Fact of life; I now keep my make-up on when I cross from CNBC's Post Nine in the New York Stock Exchange to thestreet's office on the 14th floor. To quote Rihana, this head shines like a diamond, if I don't.
Third, the length of stories has to be tailored to the web now for all but the most lucrative of outlets, again a negative development for those of us who strive for in-depth coverage. The most successful of us today are those who actually think they can tell a fully informative story in 140 words, or even 140 characters. That's the new journalism I guess.
Fourth, the proliferation of web-based financial commentary has led to a diminution of standards that I find, shocking at times. We know, we all see it every day as we often have to chase down stories that are simply inaccurate or packs of lies to gin-up pageviews that proliferate way too easily. The checks are often lacking. I keep thinking about how a hedge fund manager short Morgan Stanley --disguised as a journalist-- assaulted Morgan Stanley with endless rumors and lies that had to be tracked down by the rest of us as a matter of course. On many occasions now when a stock drops precipitously you end up reporting the lie that was spread on the web in an outlet without good standards, and then trying to shoot it down. There is more urban legend in financial news than we care to imagine.
Fifth, I think we do a disservice to viewers and readers by not insisting that guests, interview subjects and commentators be upfront about their performances and their positioning. We spent a huge amount of time policing the industry for financial conflicts, including the desire to procure business if the individual is an analyst, say, from a brokerage firm. But we put people on or interview them and rarely ask how they are performing or, if they are bullish or bearish how much exposure they have. I can't tell you how many times I have seen people be negative on air without having to disclose how they might benefit from the market coming down. Or they need to have the S&P 500 to come down to perform better as their exposure to the market has been minimal after a big run. We all need to do a better job explaining the motives for what people have to say.
Finally, I find the coverage, the slant over all, too bearish among many of the writers and editors across all mediums. This is a difficult issue to opine on because we always need to post the red flags when they need to be posted. But the coverage seems out of synch with the direction of the market over these four years and that has hurt not helped the reader or viewer and I am still enough of a service dog journalist not to care about what I perceive to be the lack of evenness about the reportage. In other words, I am not asking for us to be more bullish. I just think that many in this room believe it is their duty to slay or nitpick the bull or promote the bear, typically by bringing on or interviewing the same negativists as always, many of whom have missed thousands upon thousands of Dow points without ever being held accountable for being so wrong. When you are negative thousands of points ago, you aren't early. You are wrong.
I am not some permabull. Nor am I demanding that you say something bullish every day. That's not rigorous. I think we just need to be two-sided or get a partner who can represent the other side. We need more pieces like that of Jim Stewart's in today's Times offering empirical evidence that you can make money buying at all-time highs on the S&P 500. My favorite CNBC spots that I do during the day time are ones where I interact with Herb Greenberg where he flags a stock that I happen to be recommending on Mad Money. I am simply stating that there has to be more evenness between negatives and the positives in one of the greatest bull markets of our lifetime. Perspective matters, helping the viewers and readers make informed choices, matters. The duking out we see in, say RealMoney, the paid site for thestreet.com I think is the best help we can offer readers trying to discern if an investment is suited for them.
Speaking of the paywall, I can't leave without saying how excited I am that the major organizations are gating themselves. The propensity for free journalism is a bad one. We were all taught, I believe, that professionals should never give away their product for free. That was the rockbed principle that I argued for against the venture capitalist backers of thestreet.com who always wanted to "blow it out, blow out the pageviews" and get more eyeballs to expand rapidly. You harm the profession with that kind of thinking and I in particular salute the New York Times for its actions which has allowed the company to profit from subscriptions in excess of advertising for the first time ever.
While my predilection is for paid products, I do want to add that I am a fan of the free-ist, least gated site I know of Twitter.. I recently had a delicious green room conversation with one of my absolute favorite and provocative columnists in the world, the Journal's Peggy Noonan and I asked her whether she thought the greats who have inspired many of us, people like Edward R. Murrow and Eric Sevareid, would have used Twitter to inform the public. She told me that these gentlemen embraced any new technology including radio and tv if it got the point across so therefore Twitter would be championed enthusiastically and it would be a terrific teaser to their more thorough and thoughtful commentary. We do need to police sponsored stories to be sure the sponsors aren't influencing the content.
Candidly I love it and use it to find out and read all sorts of people I would otherwise have never heard of including many in this room. Twitter can help individual journalists develop a powerbase that hopefully can lead to a following that would allow them to go off on their own one day with a video product that can be lucrative enough that they do not need to be dependent on a big institution to get your point across. Twitter allows people to brand themselves and perhaps give them hegemony over themselves someday.
I feel so strongly about the blogosphere by the way that once a week I sit down with two of the most talented journalists working today, the Nicole and Ross Kenneth Urken, yes sister and brother, and do a video at thestreet called old dog, new blog, where they teach me the new tricks of our trade and who is doing the best of them. They recently taught me how to speak Emoji and how to install NIMBY, no Not in My Back Yard, but No Intoxicated Messaging by You! On to my I-phone.
Nicole is Mad Money's fabulous research director and a great new generation journalist trained at Goldman Sachs who, 30 years from now, might be getting her lifetime achievement award.
As I conclude I want to circle back to my first thoughts to leave you in a way that is constructive in nature. In my 36 years in journalism I cannot recall a time where we have as many high quality journalist doing fabulous financial editing and writing, but I also cannot recall a time when we have so few journalists in general and that's both a testament to those in this room and an indictment of the web in particular and the economy in general.
Thank you very much.