Investors Beware!….Journalists on the Loose!

09 August 2007

Too many investors treat business journalism as the gospel. In particular, retail investors seem to think that if something is published in the newspaper or on the internet then it must be true. This is the cause for a tremendous amount of frustration for IR professionals who are responsible for dealing with retail investors.

Quality_control

I was floored by this recent example of a short AP article that was embarrassingly wrong.  So wrong, in fact, that I found the correction to be almost comical.

In cases like this IR professionals are usually left to mop up a business journalist’s mistakes.

As the former head of IR for a company I encountered far too many of these types of conversations with retail shareholders:

Investor: “The newspaper said that your company is not performing well and that is why the stock price is down. What is going on over there?”

IR Pro: “Actually, revenue is up 50% from a year ago and earnings are up 30% from a year ago. The stock price is down when compared to last week but it is up 45% when compared to last year.”

Investor: “But an internet article said the same thing as the newspaper article. What is going on over there?”

IR Pro: “The real question, sir, is what is going on in your head?  If the newspaper or internet told you that your city had been invaded by aliens would you call the mayor asking for his defense strategy?”

Ok, that isn’t exactly what I said, but it is certainly what I felt like saying.

I know that there are good business journalists out there, but unfortunately, too many business writers are driven by meeting a deadline rather than getting the facts straight.

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