Wow, I have not blogged since Christmas. ZIPO… nada, zilch… the problem was time. I HAD NO TIME!!!!
I was very very busy with two projects: Reconcillation, and HippoTrader. From previous postings I talked about how I am working on a part-time basis with an investment bank. That is my reconciliation project, which is working fine. The second project is HippoTrader and I have to say I am pleasantly surprised on how it is working. Hippotrader is an advanced trading platform that allows arbitrary backtesting and optimization of Excel based strategies. The neat thing with HippoTrader is that you don’t need to write VBA code, just know how to use an Excel spreadsheet. Right now I am keeping it low key because I am more interested in getting it battle testing and working for boutique funds than actually wanting to sell it to the masses.
Though I digress, because the real reason I wanted to write this blog entry was write about John Stewart of the Daily News Show and Jim Cramer. On February 20, 2009 I wrote that I disproved of Rick Santelli’s comments. Here were some reactions from people:
“What if in 2001, you sold your German house for 20% over its value. Would you send a check to your neighbor for the profit?”
“Sounds like Rick is finally standing up for his “right of conscience” and putting out a few challenges in defense of it. A lot more of us need to do the same. Right on Rick!”
“You hit the nail on the head Rick. Its about time someone from the media exposes what the government is doing. I will stand by you!!”
So people thought Rick was doing the right thing, by complaining about this. What I did not like about Rick and the entire CNBC crowd is that they are not understanding the psychology of things. You can have free market economies all you want, but if they don’t serve the people then you will not have free market economies. In fact at my SD Investment club one investor was complaining how he had to pay 30,000 USD per year for health care. And in the opposite a youngster of 27 years said, “hey this can be fixed with the free market.” And here is where I say that if the system is not working for the people then that system will change.
I prefer free market economies! Trust me on this one, but I also understand that there are limits since people want well being. And this is where John Stewart jumped in around March 4, 2009. He complained about how Rick Santelli is being disingenuous when the small person is being saved, yet all is ok for the big financial institutions to be saved. To be fair Rick was complaining about the AIG, and bank bail out plans. Yet when I saw this video I said to my wife, “John Stewart has declared war on the financial community.” My wife on the other hand said, “oh no you are making too much of this.”
Along rolls March, the barbs continue, and then on March 12, Jim Cramer shows up on “The Daily Show.” Let’s first make things clear, Jim KUDOS! You have the guts to go into the den and you did what you could. I AM IMPRESSED as it takes a big individual to take a beating. In my books Jim, you are ALLRIGHT! Yes I have a love hate relationship with you, but you did ok!
So what is this all about? Exactly as John Stewart said, paraphrasing both him and Jim they are in the business of entertaining and not informing. In December I said that CNBC had lost its ways on December 5, 2008.
CNBC has become one big showmanship show and lacks value…
As I have been saying for a while to my wife, CNBC has gone Hollywood and lost its true purpose. Those people that actually provide value like Mark Faber, or Mark Haines have been sidelined. CNBC Europe has not gone entirely this route, but I have stopped watching it as well. The real problem here is that it is just not that interesting anymore.
Ok so what is the real problem here? Advertising! Minyanville provides some great insights:
It never was. It’s about the perceived responsibility financial media has to report and discuss financial issues that may be unpopular. Popularity is a sore point for television networks – for all media, really. There’s no "build-it-and-they-will-come" playbook for keeping the lights on and paying the bills. One thing we’ve learned while trying to build a financial media platform at Minyanville: Advertisers don’t like it when you say negative things about them.
This is the core of the problem CNBC in their quest to become a top rated channel, has sold its soul to the CEO’s. They need advertisments, and will not ask the hard questions. CNBC has indeed become one big product pitch station. As Jim Cramer himself said, “I am in the business of providing entertainment” Yet is that what CNBC is supposed to be about? Entertainment? I give talks at conferences, and I like to entertain as well, but I always make sure that people are learning how to use the techniques that I presented. For if I did not provide any value they would complain. Conferences cost money, and to keep them alive people have to pay real money, which is not the case with CNBC. CNBC needs advertising!
I was never convinced by the advertisement argument because it seemed like money for nothing. There is always a cost, and with CNBC you now see the problem. This is why I am completely convinced by bloggers since bloggers on the whole have to make money otherwise, and they are not restricted from speaking their mind. In fact this is why I prefer bloggers to the mainstream news media. Though some may say that bloggers are bought by companies. Fair enough, but you have the choice to ignore them and listen to somebody else. This is also why I think corporations like to diss bloggers since they can’t “control” them.
I went through this once with Microsoft in 1995-2000. At that time Microsoft and I were close partners, but then in 2000 I had a fairly high meeting with Microsoft and said the following:
“If you don’t change your practices Open Source is going to make your life VERY difficult.”
I feel I was right because Open Source did make Microsoft’s life a living hell and Microsoft has never been quite the same. Yet because I tried to help them understand Open Source they critiqued me and cast me out as “not understanding their business”. It was ok at the time since I had alternatives, but I see many of my peers today who are cringing on critiquing Microsoft since Microsoft helps them pay their bills. Did my relationship recover from Microsoft? Nope not at all. Though I really don`t care anymore since I do what I want to do.
So while I have sympathy with CNBC on their dilemma I am also very critical in that they did not have plan B!
What does CNBC do now? Here are my recommendations for CNBC.
- Clear the deck, and that does not mean firing people. It means saying from now on no more pulling the line for CEO’s and companies. If people are found to still patronize warn them, and then fire them. If people lie they will be fired and their comments will be sent to Justice Department or SEC. And if the government does nothing them CNBC will keep a tally.
- Get more individuals involved, meaning more hedge fund, boutique fund representation. Stay away from “stars”. The hedge fund and boutique fund industry for the most part have been upfront on their behaviours, reward them for it. Yes some are bears and called for a complete collapse, but there are other hedge funds who had other opinions.
- NO MORE STAR! Meredith Whitney got lucky! Yes she called it, but I have made some good calls myself. I want to see some track record and some more analysis. If they are not willing to provide it to the public (due to wanting to monetization) then tell them to STFU!
- Challenge people. If they say the world is going down, then challenge them with facts and numbers. NO MORE HERESAY!
I think if you do those things then things will change in the industry…
Finally… I will remain honest and open about all my talking points. If I change my mind I will blog about it! I will not engage in deceit! You have my blogging word on that!
So what is next on deck? A few reviews actually…