Spotting Bullshit in Financial News in a Few Easy Steps

One of my favorite ways to demonstrate the idiocy of daily financial news is to check out who writes the daily grind for wires such as Reuters. Today, I randomly pulled this piece from Yahoo Finance:

NEW YORK (Reuters) – U.S. stocks fell more than 1 percent on Wednesday as mounting fears about the euro zone prompted investors to sell sectors tied to economic growth. The region’s debt woes sent investors fleeing to safe havens, like the 10-year U.S. Treasury note, whose yield fell to the lowest in 60 years. The euro, meanwhile, slid to its lowest against the U.S. dollar in 23 months. U.S. stocks have been closely tethered to the euro’s fortunes, with a 50-day correlation between the currency and the S&P 500 index at 0.91. Yields on 10-year Spanish bonds moved closer to 7 percent, a level at which other euro zone members were forced to seek a bailout. Spain is expected to issue new bonds to fund its troubled banks and troubled regions despite increased borrowing costs. Adding to the concern, Italian 10-year yields topped 6 percent for the first time since January at a bond sale, raising concerns the region is vulnerable to contagion. European shares ended 1.5 percent lower. “We’re being held hostage by Europe, by the increasing tensions in Spain,” said John Kattar, chief investment officer at Eastern Investment Advisors in Boston, which manages $1.7 billion. “We’re back to a risk-off mode, with cyclical sectors getting hit really hard.” The Dow Jones industrial average was down 158.18 points, or 1.26 percent, at 12,422.51. The Standard & Poor’s 500 Index was down 18.99 points, or 1.43 percent, at 1,313.43. The Nasdaq Composite Index was down 40.20 points, or 1.40 percent, at 2,830.79. All 10 S&P 500 sectors fell, with energy the biggest decliner of the day. The group tumbled 2.9 percent alongside a drop in crude oil prices, and consumer discretionary stocks were off 1.7 percent. The PHLX oil service sector dropped 3.8 percent while crude fell 3.3 percent. Halliburton Co dropped 4.5 percent to $30.56. The CBOE Volatility index jumped more than 12 percent, the biggest spike for the “fear index” since mid-April. Many analysts view next month’s parliamentary election in Greece as key to whether the country stays in the euro zone. Polls showed on Wednesday that parties for and against a bailout were neck-and-neck or very close to each another.

Who wrote that? Ryan Vlastelica. Who is he? His Twitter and Reuters blog:

“Ryan is an alum of New York University, where he studied journalism and American politics. He currently works on the Reuters stocks team.”

The point? That article is written from the vantage of implied expertise. The author very assertively lays out the reasons why certain indices are moving up or down–for today!

Do I really need to spell this out?

5 thoughts on “Spotting Bullshit in Financial News in a Few Easy Steps

  1. And I am not picking on this fellow. Maybe he will see this, see the light, and move on and away from Reuters. He will thank me 10 years from now.

  2. I quit reading the finical section a LONG time ago…. It just astounds me these nerds get paid for such tripe.

  3. Covel, AWESOME Podcast! Just listened to it today. Love your no-nonsense delivery of this material.  In this touchy-feely world the harsh truth is becoming a rare bird.  If people are judging you…the things they say and do say more about them than you (and obviously they’ve not read your books). Many of us who *do* Trend Follow and *do* make money in this value the brilliance in the perspective you continue to deliver. 

    You’re nailing it: Whenever there’s enough price there will *always* be a story; profoundly, the inverse is not always true.  Why don’t the sheep realize this? Oh that’s right, they’re busy holding onto their FleeceBook shares that are going to skyrocket any day now 😉 

    Very much looking forward to the upcoming MIT Advantage Player interview. A friend of mine who is now with Goldman Sachs was in that group as well once upon a time…viz. Strategic Investments. Fascinating material there.  Personally and in life I love game theory and am partial to participating in situations with a significantly positive Expected Value.  

    Keep it coming, you’re stepping your game up mon ami! 

    Jeff

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