Last week, Chao Deng published her “memoirs of a market reporter” at CJR.
Critics say markets reporters must suffer from A.D.D., because short-term fluctuations in stock indices really don’t matter much in the long run. They say it’s absurd to pin a single narrative on spot news involving countless individual decisions, many of them made by robots. Too often, coverage favors one slant if stocks are up and another if stocks are down when, in fact, nobody really knows.
And yet, the bigger the swing in the Dow, the more urgent the need to chase down an explanation, even if it’s a short-term one. Indeed, larger swings actually predict greater reader interest, which, in turn, validates the coverage.
She’s half right. It is absurd to tie narratives to intraday market moves. On the other hand, it’s even more absurd to chase down an explanation, especially when most of the time there is no explanation. Yes, readers demand such things. But they only harm themselves by doing so.
Here’s Chao criticizing one of her own headlines:
In response to one of my pre-market stories headlined “Futures Gain on Obama Jobs Plan,” for example, a reader had commented:
Can you prove that Obama’s $300b plan which has no chance of passage is the reason for futures being up today. There have been many days where futures rebounded after 300+ points of losses. Pretty sloppy reporting.
In retrospect, I wish the headline had been that futures were gaining “ahead” of the President’s jobs speech. Then I would have been laying out a possible reason for the gains in futures but not definitively pinning down on one. It’s a word game, sure, but words matter, and a small tweak would have resulted in a more accurate headline.
This kind of ridiculous Clintonian language-parsing helps no one, except insofar as it applies a wafer-thin layer of CYA to a practice which is fundamentally absurd. “I never said that stocks rose because of the jobs plan, I said they rose ahead of the jobs plan! So, I’m not saying that there is a causal relationship there, just that there might be! And you can’t deny that!”
Chao does try another tack, which is closer to David Gaffen’s argument in the video above:
All this might lead you to conclude that the market moves randomly most of the time, and we shouldn’t even try to find out why. But wait. Throwing our hands up is just as extreme an overreaction as pinning a day’s move on a single event. For one thing, it’s a sure way to lose readers, who are grasping for an explanation. For another thing, there are ways to do it reasonably without falling into the over-simplification trap.
Actually, faced with inexplicable moves in the stock market — and the vast majority of intraday moves are inexplicable, in that no one really has a clue why they happen, or whether there’s a reason for them at all — throwing our hands up is an entirely rational reaction, and not an overreaction at all.
There will always be readers who want some ersatz explanation of what the market did today; there will always be news organizations pandering to those readers. But if you’re a media organization which stands for reporting the truth in a high-quality manner, then market reports are a dangerous place to go, because they’re all built on quicksand.
Is it possible to do market reports “reasonably, without falling into the over-simplification trap”? I think it probably is, if you report on what the markets have been doing over the course of a few weeks or months, and you do a lot of reporting and thinking. But if you’re writing a dozen market reports a day? No. None of those are going to have real value.
Market reports should not be an everyday staple of news coverage. Sometimes, occasionally, there are stories in the markets. And then those stories can be reported. But when there aren’t any stories, there’s no point in trying to invent them. And so the daily report — let alone the intra-day report — is at heart a stupid piece of journalism. Some are better than others, to be sure. But none of them are any good.