It’s September 2004, just days after the Republican National Convention. Wall Street is humming with the usual activity, which essentially amounts to a bunch of guys with unkempt hair walking around giving the bunt sign to each other.
They know what it means. The rest of us are trying to figure out why, if this is a sign language convention, everyone is shouting. But such is life in “the pits,” one of the few workplaces in America named after the intelligence level of most of its occupants. So as with most people, the doings of the folks on Wall Street are really only interesting when they’re utterly ridiculous. But since that’s pretty much every day, CNBC is guaranteed an audience. It’s September 2004, just days after the Republican National Convention. Wall Street is humming with the usual activity, which essentially amounts to a bunch of guys with unkempt hair walking around giving the bunt sign to each other.
They know what it means. The rest of us are trying to figure out why, if this is a sign language convention, everyone is shouting. But such is life in “the pits,” one of the few workplaces in America named after the intelligence level of most of its occupants. So as with most people, the doings of the folks on Wall Street are really only interesting when they’re utterly ridiculous. But since that’s pretty much every day, CNBC is guaranteed an audience.
So we will always be able to count on Wall Street news, just as surely as we can count on said Wall Street news making no sense whatsoever, which brings us back to September 2004.
FOX NEWS ALERT scream the monitors. That makes no impact. We get those when parades start on time. But then there’s this: “Mass Casualty Event in Washington, D.C.!”
Oh God! Either the Catholics all went to church in jeans or a bunch of people are dead! Sell! Sell! SELL, Farley! Unload Unocal before another low-level Department of Agriculture bureaucrat croaks!”
Now you’re seeing some serious sign language. The waving arms mean buy. The waving arms, craning necks and panicked eyes mean sell. These eyes look like the kid in “The Shining.”
“Danny! Danny!”
“Get away from me, Dad! I’m divesting myself of airline stock!”
The traders watch the monitors nervously as police descend upon the scene. Crime scene tape! The market drops 15 points. Frightened people hurriedly flee a parking structure. Another 25-point drop. Egad! The anchor says we’re going to Geraldo live at the scene! Another 40 points disappear from the value of the market forever.
All told, the Dow has shed 70 points in 20 minutes. All we need now is the inevitable video from Osama claiming responsibility, and people will start jumping off tall buildings.
FOX NEWS ALERT!!!!! Um, hey, about that whole “mass casualty event” business? You know? It’s the funniest thing. It seems there were some kids with some pepper spray…
The traders fix their gaze upon the screen. Well, Farley is still waving his arms until his friend elbows him in the ribs.
“Dude, pay attention! There’s no terrorist attack!”
“Crap! I just sold Unocal!”
Farley starts waving his arms without the neck-craning and the wild eyes. So does everyone. What a great time to buy, what with the market just having tanked 70 points in 20 minutes.
Reality check
We’ve gotten used to this. Something bad happens, or appears to happen, and the market gets “jitters.” You know all that stuff they tell you in amateur investor school about how investing is a long-term proposition, and you pick a strategy and don’t “play” the market? You bought that? That’s not how we do things on the Street, son. You don’t just react to things. You overreact. That’s why you’re here. Who cares about a company’s underlying financial strength, the experience of its management team or new market penetration? A cruiseliner just started taking on water near Bimini. Sell everything!
The conventional wisdom about the market’s reaction to terrorism news is as follows: First the market will dip because of “uncertainty,” only to bounce back as the event proves to be either a false alarm or something short of the end of the world.
So I’m supposed to sell off all my stock whenever I’m feeling uncertain? That’s pretty much all the time. I’m uncertain about what I want for dinner tonight. Better sell my Swanson Frozen Dinners stock. I’m uncertain what time it is. What’s wrong with you, Timex?
Farley doesn’t know quite what to do. High oil prices and labor problems suggest the boss might want him to dispense with his American Airlines stock. But “Superman Returns” is getting great reviews. What if he and the rest of the market are supposed to be “buoyed” and he missed the memo?
Perhaps folks can’t stick with the whole investing-is-long-term principle because, if we actually did it that way, there are too many people who just wouldn’t have enough to do. The guys in the pits would have no reason to wave their arms. Lou Dobbs and Neil Cavuto would have nothing to talk about, although Cavuto could just do more Victoria’s Secret segments, which he seems to prefer anyway.
But it’s one thing to panic over a spike in the price of composites if you’re heavy in plastics. If you start selling because of terrorism, what exactly are you afraid of? Do you think all commerce is going to come to a screeching halt? Even if everyone starts heading for fallout shelters, they’re not going before they stock up on Chunky Vegetable Beef and bottled water. I suppose markets react to events irrationally because people do the same thing, and people comprise the markets.
But this probably means we should dispense with two notions: First, the investment community consists of people who understand investing better than the average person. Second, you’re actually keeping up on real business news by following the market.
It’s not about the numbers
Most national news focuses its so-called business coverage on the stock market because it’s easy. Granted, the fractions can get a little confusing, but we can leave that to the people who type in the information on the crawl at the bottom of the screen.
I have no idea what a single company in America did today, but I just found out whether Farley was craning his neck while he was waving his arms. And the worst part is that I think I’m up to speed on the state of American commerce.
Treating the stock market like serious business news is like going to a baseball game and trying to figure out what’s going on by watching the fans. To be fair, panicky guys with bedhead probably make for more interesting video than most CEOs, although the latter might be able to tell you what’s happening in business. Then again, maybe we don’t want to know. If Farley acts like a nut, you can laugh at him. God help you if you discover your CEO is just as clueless.
That’s it. I’ll be in the bomb shelter after I pick up some soup.
