6. Money Honey

The scholar Marshall McLuhan elliptically noted that “the medium is the message.” The medium is newspapers, books, television, and increasingly the Internet. The message now was money. Banker Walter Wriston anticipated it: “Information about money has become almost as important as money itself.”¹

Once, newspapers gave more space to sport than financial news. When asked about the reason, Richard Harwood, the assistant managing editor of the Washington Post, replied: “I guess it is because we think sport is more interesting to readers than business and economics. I know it is to me.”² In the 1980s, business and financial news went mainstream, reflecting the increasing importance of money matters. The world rapidly became an endless discussion of money, directed at people who either did not have much of it or had a lot.

Printing It

In 1888, Horatio Bottomley launched the Financial Times (FT), originally known as the London Financial Guide, a four-page journal targeting the financiers in the City. In 1889, Dow Jones created The Wall Street Journal (WSJ), the Journal, for the financial community in the north east of America. The FT sought to be the friend of “the honest financier and the respectable broker.” The WSJ sought to provide readers with facts on the market.

Today, newspapers provide a mix of company news, market news, and political developments as they might affect the market. Most take American broadcaster Ted Koppel’s advice seriously: “People shouldn’t expect the mass media to do investigative stories. That job belongs to the ‘fringe’ media.”

If someone is directly quoted in a story, then they are generally seeking to lift their profile. A “source close to the company” is the time-honored method of leaking a story that would cost you your job. “Market sources” refers to simple gossip. Politician Donald Rumsfeld summed it up: “Anyone who knows anything isn’t talking and anyone with any sense isn’t talking. Therefore, the people that are talking to the media, by definition, are people who don’t know anything and people who don’t have a hell of a lot of sense.”³

Specialized magazines cater to the fetishes of their target audience. There are even newsletters that report on the average recommendations of other investment newsletters: “the path of least resistance continues to be up.”

Personal finance writers provide sound tips for financial success. If you give up a $4 Starbuck’s latte each day for 40 years, you will save $1,460 each year, $58,400 over 40 years. If you can invest the savings in the market at the end of every year and earn 20 percent each year on your investment, what will you have at the end of 40 years? $10,722,032. If you invest your $121.67 savings from foregone lattes at the end of each month, you will have $20,365,160 in your latte retirement fund. As Albert Einstein supposedly noted “compound interest is the eighth wonder of the world.”

Column Inches

Columnists, name journalists or authorities known for being famous rather than for their output, express opinions on the topic du jour. Opinion pieces provide opportunities for banks to get their views in front of the masses. Only the fact that the piece is attributed to the analyst (for personal recognition) and the company (for marketing value) is important. It helps to come up with the big idea.

In 2001, Jim O’Neill, an analyst with Goldman Sachs, came up with the BRIC (Brazil, Russia, India, and China) economies. CRIB was rejected as infantile. It was marketing genius. The now ubiquitous acronym pithily captured the increasing power of emerging countries in the global economy. As investors and companies flooded into the BRIC economies, Goldmans, the thought leaders, earned large fees from providing advice, raising money, and investing it. In India in 2007, when a fund management company was listed on the Mumbai Stock Exchange, its share price went up sharply because one of the management team had worked with O’Neill on the BRIC research.

In 2010, O’Neill introduced a new acronym for favored frontier markets—CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa). A cat-like omnivore, whose musky anal gland secretions are the basic ingredient for perfumes, replaced the solidity of building materials. Eager for column inches, a competitor coined the term MIST (Mexico, Indonesia, South Korea, and Turkey).

In early 2011, as North Africa and the Middle East, including Egypt, was rent apart by political uprisings, an anonymous blogger joked that emerging market investors were hunting in the “MIST” for “CIVETS” with only a “BRIC.”

Sure-fire moneymaking ideas are highly sought after. Comedians John Bird and John Fortune (the Long Johns) captured the quality of financial advice in a YouTube comedy sketch. One John tells the other that State Street Global Markets has issued research stating that “market participants did not know whether to buy the rumor, sell the news, do the opposite, do both, or do neither, depending on which way the wind is blowing.” Then, a few days later, ABN-AMRO analysts provided clients with even more telling advice: “we are back to ‘happy days’ again.”⁴

In early 2010, a controversy developed in Australia over financial institutions paying news networks to allow their analysts to appear on news bulletins. Was this advertising? The media regulator ruled that the financial news did not constitute a factual program and therefore it did not have to investigate the matter.⁵

Zdener Urbanek, the dissident Czech novelist, observed that assumptions about what was written are dangerous:

In dictatorships.... We believe nothing of what we read in the newspapers and nothing of what we watch on television, because we know it’s propaganda and lies. Unlike you in the West. We’ve learned to look behind the propaganda and to read between the lines and, unlike you, we know that the real truth is always subversive.⁶

Thomas Jefferson, the third president of the United States, agreed: “The man who reads nothing at all is better educated than the man who reads nothing but newspapers.”

Video Money

Financial TV in the United States was once the permanently tanned, urbane Louis Rukeyser and Wall Street Week. Rukeyser, a journalist, became an award-winning presenter, helping educate ordinary people about economics and business. Rukeyser was calm, measured, plainspoken, and thoughtful. Discussing a hairpiece manufacturer, he quipped: “If your money seems to be hair today and gone tomorrow, we’ll try to make it grow back by giving the bald facts on how to get your investments toupee.”⁷

The arrival of cable and satellite news channels, CNBC (formerly the Consumer News and Business Channel) and Bloomberg, specializing in coverage of business and financial markets, changed financial TV globally. The networks broadcast throughout the day, providing reports on business, updates on financial markets, stock market indices and commodities prices, interviews with chief executives and business leaders, and commentary. The growing interest in stocks and money matters culminated in the day trader phenomenon.

Most day traders were small-time investors risking their own money—American Mrs. Watanabes trading part time. Between 1997 and 2000, during the euphoric dot.com bubble, day traders traded stocks like Intel or Microsoft as well as ephemeral companies like pets.com or boo.com. Day traders made large numbers of trades during a single day as they bought and sold online in a frenzy to take advantage of news and opportunities. Some day traders worked out of trading alleys housing stations (a desk and computer with high-speed connection to the electronic broker). In the corner, a large plasma screen TV was permanently tuned to CNBC or Bloomberg.

From 1997 to 2000, as the NASDAQ rose from 1,200 to 5,000, investors with next to no experience made substantial profits buying and selling technology stocks. Professional traders made larger profits, exploiting the arbitrage opportunities created by day traders. In March 2000, the dot.com bubble burst, temporarily ending the day trading bubble.

Studs, Starlets

When Rukeyser’s show ended after 32 years, new stars emerged in the United States—“Mad” Jim Cramer, Money Honey, the Street Sweetie, and Suze Orman. If Rukeyser was sedate charm and genteel bonhomie, then the new financial news presenters were studs and starlets of financial pornography.

The new era was defined by Jim Cramer, host of CNBC’s Mad Money, making loud animal noises, doing his Ozzy Osbourne routine and abusing guests as he doled out stock tips. Appearing on TV in a diaper to illustrate the relationship between Kimberly-Clark, a consumer products company, and the price of oil, Cramer explained:

I was going through all the different ingredients in a diaper, and it’s all the ethyls, you know, the polypropylene, polyethylene, polyvinyl.... So, right before the camera starts, I pull the diaper on...and I do the whole piece straight, and I know that I’ve got people’s attention because I’m wearing the diaper.⁸

Maria Bartiromo allegedly tried to get trademark protection of her nickname—“Money Honey.” Like many TV financial anchors, she frequently is the news. In 2007, she was featured in a story involving Todd Thompson, a senior CitiGroup executive, and the bank’s corporate jet. Thompson left the bank shortly afterward. The incident fueled jokes harking back to an earlier era when a senior banker married a stewardess on the corporate jet: “Before landing, please return the flight attendant to the upright position.”

Erin Burnett is the “Street Sweetie.” On the Morning Joe program on MSNBC, commenting on a clip showing President Bush with two other world leaders, Burnet referred to the president as the “monkey in the middle.” Given her own show, Street Signs, Street Sweetie was keen to interview important people the world cared about—CEOs, presidents, and Angelina Jolie.

The biggest star in the firmament is the polymath Susan “Suze” Orman—award-winning TV host, financial adviser, best-selling author, and $80,000-per-speech motivational speaker. She hosts The Suze Orman Show, a weekend financial advice show on CNBC, and Suze Orman’s Financial Freedom on QVC.

Her hallmark “Can I afford it?” segment has callers asking Orman’s permission to borrow money or purchase a must-have item. Orman’s response, untypical of the age, is generally virulently anti-debt, drawing on her own life experiences. Callers with high levels of debt are advised not to borrow more, in her characteristic Joan Rivers’ hectoring style peppered with well-practiced slogans from her books: “People first, then money, then things”; “Truth creates money. Lies destroy it.”

Suze Orman is a charismatic melange of pop psychologist, trusted counselor, and tele-evangelist. Orman’s common sense channels Benjamin Franklin’s Poor Richard’s Almanac and The Way to Wealth: “a penny saved is a penny earned.” Her anticonsumerism and antimaterialism message sells.

Cramer’s diaper stunt and Orman’s “Can I afford it?” segment are both deeply symbolic of the new anyone-can-become-rich age of money that financial TV portrays.

Financial Porn

Financial TV is pornography—sleazy, intrusive, seeking to titillate, and shock. During a crisis, these programs can be compulsive. Once, pornographic scripts had a passing interest in improbable plot and implausible dialogue. In the Coen brothers’ film The Big Lebowski, Jackie Treehorn bemoans falling standards in adult entertainment. Competition from cheap amateur pornographic films means that professionals can no longer afford the extra investment in story, production value, and feeling. Financial TV never bothered with plot, dialogue, or production values, focusing only on the action.

The 24/7 Joycean stream-of-consciousness financial noise machine calls for successive, rolling segments—pre-market, market, post-market, recapping today’s market and, finally, looking forward to tomorrow’s market. The formula requires an anchor or two. The only part of Louis Rukeyser’s legacy that survives is the fashion sense. Rukeyser was voted the best-dressed man in finance and America’s most sartorially elegant TV host. Playboy magazine described him as a “rakish raconteur.” Today’s TV hosts are well dressed, impeccably groomed, and perfectly coiffed.

Rudimentary sets create the illusion of overlooking a frenetic exchange or a city panorama, made possible by computer imagery. The occasional outside shot on the steps of a stock exchange or outside some monumental bank headquarters interrupts the visual monotony.

The fare is constant financial news and interviews with in-house (paid) and outside (unpaid) experts. A ticker-stream of breaking stories and market information scrolls along the peripheries of the screen. Graphs and various visuals assault the senses. The soundtrack is a series of video game noises, typically when the screen changes. The amphetamine-charged pace features interviewers and guests repeatedly interrupting and constantly talking over each other. Presenters take the title of CNBC’s signature show—Squawk Box—literally.

The editorial approach requires drama:

Human beings have an innate desire to be told and to tell dramatic stories.... I am at a loss to name a single operatic work that treats coronary artery disease as its subject but I can name several where murder, incest, and assassination play a key part in the story.⁹

This is money, Jerry Springer or Howard Stern shock-jock style.

Speedy Money

Through the day, a succession of guests is interviewed on the topic of the moment—news, just released statistics, government policy announcements, or the latest good or bad news. TV follows its print rival: “If it bleeds, it leads!” The aim is to shed light on the impact of the news on the market. But as Donald Rumsfeld astutely observed: “The problem is that people think that news is something that is announced before it happens, as opposed to something that is reported when it does happen.”¹⁰

Each interview is about 5 to 10 minutes—only divine beings get longer. Presenters are unlikely “to use a word that might send a reader to the dictionary” (to use William Faulkner’s observation about Ernest Hemingway).

Sensible interviewees offer equivocal opinions to preserve plausible deniability. Rumsfeld once masterfully set out the mechanisms of evasion: “I’m working my way over to figuring out how I won’t answer.”¹¹ The alternative is former U.S. Vice-President Dan Quayle’s formula: “I believe we are on an irreversible trend toward more freedom and democracy—but that could change.”

There are experts who do not know: “I was born not knowing and have had only a little time to change that here and there.”¹² There are those who have theories: “If the facts don’t fit the theory, change the facts.”¹³ There are the fanatics: “one who can’t change his mind and won’t change the subject.”¹⁴ Then there are politicians, like Sarah Palin, a former governor of Alaska and vice-presidential candidate: “Well, let’s see. There’s—of course—in the great history of America rulings, there have been rulings.”¹⁵

In 1891 W.J. Stillman, writing in the Atlantic Monthly, commented about the effects of an earlier technological innovation—the telegraph—on journalistic standards:

[It has] transformed journalism from what it once was, the periodical expression of the thought of the time, the opportune record of the questions and answers of contemporary life, into an agency for collecting, condensing and assimilating the trivialities of the entire human existence.... The frantic haste with which we bolt everything we take, seconded by the eager wish of the journalist not to be a day behind his competitor, abolishes deliberation from judgment and sound digestion from our mental constitutions. We have no time to go below surfaces.¹⁶

During the global financial crisis, CNBC’s Power Lunch hosted a segment—“Turning the corner”—with Dr. Doom, Nouriel Roubini, together with the former derivative trader, financial philosopher, and best-selling author known variously as Nassim Taleb, Nicholas Nassim Taleb, NNT, or simply the Black Swan (his best-known work).

Bill Griffeth, the interviewer, and his co-host Michelle Caruso-Cabrera, started off upbeat: “What would it take to make you bearish on this economy right now?” Dr. Doom summarized the position: “It’s ugly!” Dr. Doom’s prophecy that the current recession was likely to be three times as long and three times as deep as previous recent recessions did not please Griffeth: “But that’s not the end of the world, is it?” The Black Swan was gloomy: “We have the same people in charge, those who did not see the crisis coming.” The hosts tried in vain to look for positive statements.

On live TV, the more dubious a proposition or unreliable a fact, the greater the authority and confidence with which it is stated. Constant repetition diminishes skepticism. Rumors, suppositions, and half-baked statistics become believable and ultimately accepted facts.

Analysis of Jim Cramer’s Mad Money share buy-and-sell recommendations show that the recommendations affect share prices of the companies mentioned but that the effects are short-lived. His stock recommendations are neither extraordinarily good nor unusually bad, whatever their entertainment value.¹⁷

Stock traders have cited the Rukeyser Effect—mention on Wall Street Week could cause a spike in the company’s stock price. There was little relationship between the mention and the stock’s performance,¹⁸ a claim that Rukeyser strongly disputed. One commentator provided an ingenious defense: “It is mathematically impossible for the thirty million viewers of this show to beat the market, since they are the market.”¹⁹

The global financial crisis painfully exposed many Wall Street media savvy stars that failed to anticipate the sharp turn in financial fortunes. Bennett W. Goodspeed, best known for The Tao Jones Averages, a treatise on whole-brained investing, used the phrase articulate incompetents to describe money-losing fund managers and financiers who frequently appeared in the media.

Bill Gross, a founder of the investment management firm Pimco (Pacific Investment Management Company), cleverly used the opportunities afforded by financial TV. Articulate, witty, and attractive, Gross became a regular on Louis Rukeyser’s Wall Street Week. Gross acknowledged the benefits of his ubiquitous media presence: “It doesn’t do you any good to be good if nobody knows about you.”²⁰

Simon Johnson, a former chief economist for the International Monetary Fund and a professor at the Sloan School of Management at MIT, observed: “I think we pay undue deference to people who are very rich and have been successful in the financial sector in this country. We think they are the gurus who think they have unique expertise, and if Bill Gross tells us there will be a panic, it must be true.”²¹

Jon Stewart, host of The Daily Show, joined in endorsing financial TV: “If I had only followed CNBC’s advice, I’d have a million dollars today, provided that I’d started with $100 million.”

Literary Money

The literate read money books—investment books, trading books, memoirs, biographies of the rich, sure-fire strategies from financial gurus, history of money books, financial disaster books, or multi-volume technical books full of stochastic calculus and the recipe for chocolate financial muffins. Books like Why the Real Estate Boom Will Not Bust, Profit from Property, Secrets of Wealth or Why the Bust is Really a Boom reflect the words of Daily Show’s Jon Stewart: “You cannot, in today’s world, judge a book by its contents.”

Books on money are examples of a well-defined genre—the self-improvement book, once feared and avoided. In one Monty Python skit on such endeavors, a man opens his door to find a self-confessed burglar, only allowing him into the house after repeated assurances that he really is a burglar and not an encyclopedia salesman.

Books on money hide a dirty secret—everybody wants a do-it-yourself plan to get rich, quickly and easily. Investment results tell a different story. Groucho Marx remarked at the time of the 1929 stock market crash (writing in Groucho and Me): “Some of the people I know lost millions. I was luckier. All I lost was two hundred and forty thousand dollars.... I would have lost more but that was all the money I had.”

In 1999, James Glassman and Kevin Hassett published a book—36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market. Glassman, an investment columnist for the Washington Post, and Hassett, a former senior economist with the Federal Reserve, inverted normal investment logic by arguing that over the long term shares were no riskier than bonds and that the traditional risk premium (higher return) demanded by investors could be eliminated. The Dow Jones Industrial Average, trading at the time around 11,000, was forecast to more than triple.

In a 1929 article “Everybody ought to be rich” in the Ladies’ Home Journal, John Raskob, a director of General Motors, wrote in a similar vein. An investment in shares of just $15 a month would, with dividends reinvested, increase in value to about $80,000 after 20 years. But Raskob, the man who wanted his readers to invest in stock for long-term wealth, was selling his shares even before his article appeared, avoiding the 1929 crash.

In support of their argument, Glassman and Hassett pointed to the fact that 6 years earlier in January 1993 the Dow had been around 3,300. A reviewer in the Publishers Weekly noted the only thing missing was an exhortation to buy stocks for the Gipper—one George Gipp, an American college football player, immortalized by Knute Rockne’s famous “Win just one for the Gipper” speech later used as a political slogan by Ronald Reagan. For many authors (David Elias, Dow 40,000: Strategies for Profiting from the Greatest Bull Market in History; Charles W. Kadlec, Dow 100,000), it was an act of faith that the stock market would go up. Louis Rukeyser once drew investors’ attention to the risk of falling as well as rising markets: “Trees don’t grow to the sky.”²²

Glassman and Hassett’s book was not without fans. One reviewer on Amazon.com was very grateful: “This book was one of the reasons I got completely out of the stock market in late ‘99 early 2000. When I read this pustulous piece of putrescent puffery I just knew I had to get out. THANK YOU KEVIN AND JAMES!!!!!” Another Amazon reviewer was concerned about the possibility of an inadvertent error: “What a strange place to find a typo misprint! But overall, surely this book is too pessimistic. Times may be hard, but it doesn’t seem likely that the Dow will really fall as low as 3,600. If it does, that will surely be the time to buy!”

Like Irving Fisher, the eminent but unfortunate Yale economist who in 1929 suggested publicly that stock prices had reached “a permanent and high plateau” shortly before the great stock market crash, Glassman and Hassett got the timing wrong. The dot.com bubble burst shortly after the book was published. Undeterred by Glassman and Hassett’s experience, in the early 2000s Robert Zuccaro published Dow, 30,000 by 2008—Why It’s Different This Time. The author graciously admitted that some of his conclusions clashed with conventional opinions.

At the time of writing, the market is trading at around 13,000 and has never touched the 36,000 level or even 30,000. Glassman and Hassett argued that they never suggested that the Dow would be at 36,000 soon. They should have taken E.M. Forster’s counsel: “No author is entitled to whine. He was not obliged to be an author.”

The only way to get rich from a get-rich book may be to follow Brother Ty’s seventh law—write a really successful get-rich book. Brother Ty is a fictional character in Christopher Buckely and John Tierney’s book My Broker: A Monk Tycoon Reveals the 7 ½ Laws of Spiritual Growth. Brother Ty struggles to poke fun at the real genre. Get-rich investment and trading-secrets books are already inadvertently funny because of their fatuous seriousness and absence of irony or self-deprecation.

Bernard Baruch, the famous financier and investor, once offered the following guide to investment success:

If you are ready and able to give up everything else, to study the whole history and background of the market and all the principal companies whose stocks are on the board as carefully as a medical student studies anatomy, to glue your nose at the tape at the opening of every day of the year and never take it off till night; if you can do all that and in addition you have the cool nerves of a great gambler, the sixth sense of a kind of clairvoyant, and the courage of a lion, you have a chance.²³

Money for All

From modest origins as a mechanism of exchange and store of value, money has evolved into something much more. Infinitely malleable, it is the reflection of the world, but also a shaper of worlds.

Individual lives and business activities are increasingly molded by money. Banks and financiers have become dominant forces in the world. The interplay of the real world and its endless monetary reflection now drives economies and cities. News about money is everywhere and deeply embedded in popular culture. It is a fragile construction that echoes Marshall McLuhan: “All media exist to invest our lives with artificial perceptions and arbitrary values.”

In 1999, with the American economy in the grip of a speculative mania, Wired, the magazine that exemplified the dot.com era, envisioned ultra prosperity. By 2020, average household income in the United States would triple to $150,000, and families would be served by their very own household chefs.²⁴ The Dow would be at least 50,000, probably on its way to 100,000. The arithmetic behind the forecasts was vague.

In the summer of 1999, James Glassman, enjoying the attention that Dow 36,000 was receiving, faced off against Barton Biggs, Morgan Stanley’s skeptical equity strategist, in a debate on the new economy. Glassman argued that the Internet was the most important invention of the twentieth century. He was mirroring the views of Kevin Kelly, executive editor of Wired:

How many times in the history of mankind have we wired up the planet to create a single marketplace? How often have entire new channels of commerce been created by digital technology? When has money itself been transformed into thousands of instruments of investment?²⁵

Biggs argued that the entire reasoning was fatuous but lost the debate 180 votes to 2 on a show of hands. Even his wife voted against him.²⁶

Faith in money was now everything. Finance fundamentalism ruled.