IN SOME IMPORTANT WAYS, THE U.S. MEDIA DOES A LOUSY JOB--
BUT THERE ARE SOME GREAT JOURNALISTS OUT THERE. SO WHAT’S MISSING?
Generalizations are dangerous, but—broadly speaking—the current feeling about the media seems to be that they are fine for entertainment—but can’t be trusted, particularly when it comes to the news.
That’s a rather disturbing development because we rely heavily on the news for the information that helps make democracy work—and trust underpins the workings of any healthy society. Unfortunately, research shows a major breakdown in trust in the U.S.—virtually right across the spectrum—with only the military and law enforcement being held in generally high regard.
When the guys with guns are the only people you feel you really rely on (and a significant minority of c.30% don’t even trust them) all is not well.
Personally, because of my line of work, and particular orientation, I hold the media in high(er) regard—but am selective in who, and what, I trust.
I don’t rate mainstream U.S. TV news highly, but am a great fan of many less mass-market publications including The Atlantic Monthly and some of the newer internet publications such as Salon, Vox, and so on.
I regard both the New York Times and the Washington Post (much improved recently) as excellent journals (within the limits of their prejudices and human nature). I checkout the Drudge Report daily just to keep some balance—and because it’s very handy to have all those links in one place.
If you are prepared to invest the time, it will be well rewarded. They are some very talented media people out there—and I have learned to trust some as completely as you can trust any source whose work you cannot independently verify. Trust, under such circumstances, always has to be qualified.
So what is missing?
- CONTEXT. Context—though publications like vox.com are trying to remedy that. I think they should go into greater detail (perhaps I am too much of a perfectionist) but their approach is both to explain and include context—and they are gaining audience fast—so they are clearly on the right track.
- HOLISTIC CONTEXT. Holistic analysis. There is a tendency for publications to announce important details—such as the employment figures—without either qualifying the data, or explaining it holistically. In effect—particularly where economic news is concerned—we get drowned in the detail, but miss the larger picture. There is, if you will, immediate context (important in itself) and the wider variety (history, perspective, and analysis). You have also got to join the dots. Everything is connected, but not always in obvious ways. Unfortunately, thinking this way requires a developed mind and is hard work.
- INTERNATIONAL COMPARISONS. The U.S. just plain sucks in this regard—because it is naturally inwardly focused, and because so many international bureau have been closed down. To do that, at a time when the world is becoming ever more globalized, strikes me as perverse. How can we know if we are using best practice if we don’t know what others are up to? The U.S. is a global power, both militarily and commercially—but curiously insular all the same. It’s a weird and dangerous combination.
- PERSISTENT FOCUSED QUESTIONING. The U.S. media are long on sensationalism, but the media are downright timid—by British standards—when it comes to nailing an interviewee. What I call ‘The Art of the Second Question’ is lacking.
- INVESTIGATIVE JOURNALISM. Serious investigative journalism is time-consuming, slow, demanding, risky (legally), sometimes dangerous (to both reputation and life), and expensive. Though it is very far from dead, it is becoming harder and harder to do within any reasonable time framework. The stated reason it has been cut-back so severely is cost—but I am far from sure it is the only reason. Investigations have a habit of developing their own momentum and of uncovering things that make all kinds of people in high places uncomfortable—especially those who own the media. Since what goes around has a habit of coming around, media owners like to keep their investigative dogs well leashed—or keep fewer of them. It makes for a much more peaceful life. True, democracy may suffer, but one has to live in the real world… Rationalization is ever ingenious. But, a healthy democracy needs investigative journalism.
- LOCAL JOURNALISM. Local journalists used to keep an eye of local news—and particularly on local government. Thanks to truly massive staff cut-backs, local oversight by reporters is going the way of the dodo. This is disturbing because the local scene represents the soft underbelly of any nation. It is generally out of sight, but vulnerable.
So many journalists and other media staff have been laid off over the last decade and a half that soon the U.S. will down down to about half the original staffing levels. That’s not staff reduction. That’s a massacre! We are talking tens of thousands of highly qualified people here.
Where do they go? What do they do? A disconcerting number—of necessity—go over to the dark side and become PR people, or lobbyists. The ratio of media managers and manipulators is ever increasing as the numbers of journalists dwindle.
Even if you factor in the internet, and the increased velocity of information, social media, and blogging, you would have to wonder whether an adequate job can still be done. A well-trained, experienced, and properly resourced investigative reporter is very hard to match.
The space in the publication can still be filled—but is oversight still as thorough?
I don’t profess to know the answer. I have my doubts—strong doubts.
But, some very fine feature journalism continues. The following article is a good example. It focuses on the admirable notion that ‘'”good enough” is often more useful than perfectionism. My stepfather called the mathematical version “dirty math,’” and memorably taught me how to do rough and ready calculations which were good enough.
It was, and remains, an invaluable skill.
Why rules of thumb beat precision.
Morgan Housel – The Motley Fool
NASA's New Horizons spacecraft passed by Pluto last week, which is amazing. It was a three-billion mile trip that took nine and half years.
But here's what blows my mind. According to NASA, the trip "took about one minute less than predicted when the craft was launched in January 2006."
That is astounding. In an untested, decade-long journey, NASA's travel forecast was 99.99998% accurate. It's the equivalent of forecasting a trip from New York to Boston and being accurate to within four millionths of a second. (Your move, Google Maps.)
This is a great reminder that some fields work with amazing precision. They are governed by pure math and physics, and aren't burdened by the whims of human emotion.
It's also a great reminder that investing is not one of these fields.
Investing is often taught as if it's something like aeronautical engineering. It's filled with precise equations that give exact answers in the way you would calculate, say, how long it takes to fly to Pluto. Seriously, look at this stuff.
Traders calculate moving averages and support bands. Economists create forecasting models to tell us how much GDP will grow this year. Chief market strategists model what the S&P 500 will do in the next year. The bulk of academic finance is based on the idea that if we try hard enough and crunch enough numbers, we can grab capitalism by its horns and forecast what will happen next. And I shake my head at that idea.
Sometimes I say, "Well Morgan, maybe you just don't understand this stuff." Which is true! But the evidence is overwhelming that those who wield complicated investing math don't understand it, either. A novice would never think stocks falling is a once-in-a-billion-year event. You need a Goldman Sachs forecasting model to think that. A normal person would have a hard time losing everything during the booming late 1990s. You need a team ofNobel Prize winners to do that. Find me one person who has gotten rich investing with his mathematical chops and I will show you nine who blew themselves up, plus 20 bumpkins who became rich using simple rules of thumb.
There are two types of stupidity. One is simple ignorance. The other -- far more dangerous -- is brilliance so deep that you assume it applies to unrelated fields. At the center of every financial catastrophe is the latter; a genius whose forecast was mathematically unassailable right up to the moment of bankruptcy. It wasn't that their math was wrong. It was that their clean math didn't apply to the hormonal jungle of finance.
One of biggest investing lessons I've learned is that the more precise you try to calculate, the further from reality you're likely to end up. Precise calculations creates a spell of overconfidence, which makes you double down on whatever you want to believe no matter how wrong it is. Some examples are staggering: Wall Street's top market strategists predict each January how much the S&P 500 will go up over the following year. Their collective track records are worse than if you just assumed stocks go up by their long-term history average every year.
In a messy world of emotions and misinformation, broad rules of thumb can be an excellent strategy.
Rules of thumb aren't perfect, of course. But that's their advantage. By starting with a strategy you know isn't perfect, you naturally leave yourself room for error, and are more flexible in accepting the market's whims.
So I don't use fancy valuation models to calculate how much stocks should return over the next 10 years. I assume 6% a year after inflation over the long haul. I figure that's good enough.
I don't forecast what the market will do this year. I assume the market will go down half of all days, a third of all years, and a fifth of all decades. That's probably good enough.
I don't predict what the economy will do this year. I assume we'll have a recession every five to seven years. Good enough.
Don't bother me with calculators that show me how much money I'll have in 30 years. I don't know what my bills will be next month. I save as much money as I reasonably can while living a lifestyle that I'm content with. I figure that's good enough.
Spare me with your analysis of why I should own stocks from some country because of economic trends. I'm diversified, and accept part of my portfolio will always be doing worse than others. I figure that's good enough.