The Culture of Charade

Thought for the Day 1Source: Emily Sunderland

We’ve all seen them, and they’re dreadful.

“Business television” – CNBC, Fox Business and the like – often bring on lower tier would-be experts from the hinterlands to fill time by opining on the latest news, the newest data release, or the ongoing market action in response to an anchor’s softball set-up.The interviewee typically ignores the set-up and plows ahead to pre-scripted and mundane (at best) talking points as quickly as possible. Such appearances are often arranged by PR firms, who brag about such “placements” and are paid well for doing so. These hits are worth doing for the networks because there is nothing like 24 hours per day of actual business and market news on offer. They have lots of time to fill.

Even so, YouTube videos of this silliness tend to show up like clockwork that same day on the websites of the interviewees to be promoted both as a badge of inclusion in the universe of experts and as a marketing tool. It’s all about establishing and building a brand. They provide a veneer of supposed expertise even though the entire exercise is bogus. The “news” is effectively meaningless and the “analysis” adds nothing to the story. However, the interviewee’s Muppets won’t know that nobody who matters pays these appearances any mind and won’t recognize how lousy they are. It won’t even matter that almost nobody was watching. It’s a charade, but everybody plays along.

So these interviews, weak-sauce though they are, offer a win-win – the network gets its airtime filled and the interviewees can pretend they are big shots with important opinions. But in no time, they all begin to sound the same, like those junior high oral reports most of us had to give and endure. Even worse, they are fundamentally phony.

The entire conceit is ridiculous because the “news” being reacted to is almost always functionally irrelevant to any meaningful investment process. The latest capacity utilization number may become a helpful piece of the economic puzzle, but it is highly unlikely to suggest any major change in the economy. Yet CNBC and its ilk roll with the charade that something urgent must be reported. The idea is to feign hotness, newness and originality in order to attract eyeballs.

Talking about long-term ideas, opportunities and trends as well as substantive issues related to the markets might actually help people, but the purveyors of business television largely assume that immediacy and urgency are necessary to capture viewers – and they may be right about that. But it’s still a charade. Even traders, who actually do have to make moment-to-moment decisions about the markets, don’t rely on television for actionable news. If it’s on the air, it’s too late to act on it meaningfully.

Indeed, nearly everything that gets a lot of attention in our business today is focused upon faster and phonier. The interviews noted above are quick-hits tied to an immediate event but without value. That said, I’ve hardly scratched the surface of the game-playing that goes on, much of it far more troublesome and damaging than the relatively harmless interviews I have been describing. And the problem extends well beyond finance, obviously.

Part of the aggregate charade is the tameness of the business press and bloggers alike. As pointed out by Dean Starkman, among others, the U.S. business press utterly failed to investigate and hold Wall Street players accountable in the years leading up to the financial crisis of 2008-2009. Few bloggers did either. Nobody wanted the music to stop. That’s why the crisis came as such a shock to the public and to the press itself.

In a March 2009 interview that would go viral, Jon Stewart confronted Jim Cramer by asserting, in effect, that business journalism presents itself as providing wall-to-wall, 24/7 coverage of Wall Street yet had somehow managed to miss the most important thing ever to happen on that beat. “It is a game that you know is going on, but you go on television as a financial network and pretend it isn’t happening.” Cramer’s excuse essentially was that he and the business press merely give the public what it wants. So whether the error was intentional (Stewart’s view) or negligent and stupid (the view of James Surowiecki of The New Yorker — a view I share because, via Occam’s Razor, I tend to expect stupidity first), the public was still horribly underserved.

Indeed, our industry is replete with examples of the culture of charade. Examples follow (off the top-of-my-head; it’s hardly a complete list).

  • Ongoing conspiracies to hide excessive fees, poor performance (among clients, managers and the hedge fund industry), and the value of indexing.
  • Advertising white papers, research reports and educational events that are nothing but marketing exercises.
  • Fear-mongering and/or bandwagoning for business.
  • Touting products and services as being original, innovative and valuable that are nothing of the sort.
  • Failing to present all sides of an argument fully, fairly and honestly.

The pressure to “build a brand” at the expense of depth, accuracy and nuance is enormous.

In the real world, of course, longer-term and more substantive thinking is actually winning where it matters, as Felix Salmon pointed out recently, in that money is leaving funds and approaches that aren’t working at record rates — a phenomenon that terrifies Wall Street and leaves much of the financial media unsure of what to do. Moreover, there are many blogs and sites that are consistently excellent – I mention them often, some in this very post. Consistent with that progress, I will try to avoid the various charades that the investment world is so fond of and to point them out when I see them. Moreover, when I fail (and I will), I invite you to call me on it and pledge that I will try to own up to my mistakes quickly and publicly. We all need to be held accountable.

My overarching goal here at Above the Market is to provide articulate, helpful, fully formed analysis. That ideal stands in sharp contrast to the culture of charade that permeates the financial services industry.

Mostly, it boils down to trying to tell the truth, the whole truth and nothing but the truth, so help me God. Sadly, that doesn’t often seem very hot or original. While originality is invaluable, it is much rarer yet also more accessible than we tend to assume. C.S. Lewis, the renowned literary critic and medievalist who later became famous as an author of children’s literature and as a Christian apologist, perhaps said it best in Mere Christianity. “[N]o man who bothers about originality will ever be original: whereas if you simply try to tell the truth … you will, nine times out of ten, become original without ever having noticed it.” Therefore, my intent here is always to tell the truth and let the chips fall where they may. Our culture of charade doesn’t value truth-telling, which explains why it is so rare, but it is the best way to be original and to impart value that I know.


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