I believe it was the transformation of Maria Bartiromo into a household name that told me that something new was really afoot. Granted, she's only a household name in certain households, but the 30-year-old host of CNBC's BusinessCenter has enjoyed a precipitous ascent up the fame ladder, seeing herself featured in Newsweek and USA Today and interviewed by David Letterman. Bartiromo, in short, has been anointed the new face of the new boom in business news.
The boom can be seen in the arrival of business news on the front pages of daily newspapers, the rise of business coverage at mainstream publications like GQ and VanityFair--and, above all, in the new attention being paid to television networks like CNBC and CNNfn. The buzz, at least, is that the growing diffusion of stock ownership has made Americans care much more about the stock market than ever before, while the uncontested authority of the free market has placed business at the center of the culture.
As it happens, it's difficult to figure out whether business news really is much more popular, or whether network executives and media analysts have just decided it should be. CNBC's business shows have an average viewership of somewhere between 120,000 and 150,000. The network's viewership peaked at just over a million when the market crashed Oct. 27. CNNfn, meanwhile, still gets hash marks instead of Nielsen ratings, which means that its audience is so small that it can't be measured. And while Moneyline--CNN's 7 p.m. business roundup hosted by Lou Dobbs, who's also in charge of CNNfn--often draws close to half a million viewers, that's still insignificant next to anything the major networks do.
Of course, CNNfn is hindered by the fact that so few cable systems carry it--it's available in only 8.9 million homes. For its part, CNBC insists that its audience during the trading day is underestimated by at least 40 percent, because a significant number of brokers and traders supposedly keep their televisions tuned to it as they go about their business. This may well be true, but even if it is, it doesn't tell us very much about the broader impact of the financial-news "boom," since those analysts presumably have always paid serious attention to the market.
Nonetheless, it seems likely that the growing importance of the stock market to the retirement plans of middle-class Americans has translated into stepped-up coverage of business news and a greater willingness on the part of mainstream news outlets--daily newspapers and network television--to showcase pieces on market turmoil. The problem is that the new wave of business news doesn't really illuminate the workings of the system all that well. In fact, most so-called business news isn't really news about business--the creation and distribution of goods and services--at all. Instead, most of it is "market" news--fruitless attempts to explain what traders are going to do in the near future, or somewhat-beside-the-point explanations of why traders did what they did in the near past. If CNBC and CNNfn are the sports pages of the late 1990s, the way they cover the stock market is analogous to a football commentator worrying more about a team's popularity than about its won-lost record.
To be sure, if you watch CNBC all day long you'll pick up some interesting news about particular companies and the economy as a whole. Unfortunately, to get to the useful information, you have to wade through reams of useless stuff, with little guidance on how to distinguish between the two. The basic reality of an all-news channel, after all, is that there is a huge amount of time to fill every single day. As a result, CNBC and CNNfn both offer a hodgepodge of fundamental analysis, technical analysis, macroeconomic news, trend spotters, and the occasional hard-news story. A day spent watching CNBC is an object lesson in what the word "pastiche" really means.
From one angle, of course, this might seem to be the ideal expression of the supermarket approach to understanding the world--or, in this case, the stock market. CNBC doesn't offer just one angle on the market. It offers multiple perspectives, in order to let viewers choose for themselves. ("I'll have two pounds of technical analysis, one pound of momentum trading, and a half-pound of fundamentals. Thanks.") So first we get a "technical" analyst who believes that if you look at the charts of a stock's movements over the past year, you can discern coherent patterns that will guide you in predicting when that stock's price is due to rise or fall. That analyst is followed by another who believes that the key is to seek out and buy those industries currently in favor with investors. She, in turn, is followed by an advocate for a more conventional approach: looking for companies with strong earnings growth that are currently trading at low stock prices.
The problem here is not that the technical analyst is crazy, although he is. The problem is that these analyses of the market are presented as if they're all of equal value--when, in truth, for any one to be correct, the others (with some minor exceptions) must be incorrect. The network interviewer--often the same one--talking to these various analysts never says: "Your argument directly contradicts the one we heard just 15 minutes ago. Why should we believe you?" Instead, there's just a lot of nodding in assent.
One way of averting this problem would be for CNBC or CNNfn to feature discussions among advocates of different approaches to understanding the market. But that sort of open conflict would run the risk of revealing the inherently futile nature of the project these networks are engaged in, namely, trying to make sense of the stock market's movement in the short term. Each day, after all, there are lots of different reasons why the market does what it does. But you'll never be able to summarize them all--and, more importantly, whatever reasons you find today aren't going to help you understand what the market will do tomorrow. In the short term, investing is really just a random walk.
What's really wrong with the financial-news boom, then, is that by creating the illusion that the walk is other than random, it depends upon and encourages a trader's approach to investing. The point of having a stock market, after all, is not so that people can buy Intel at 72 when it's on its way up and sell at 76 to reap a quick profit. The point is that investors are supposed to direct capital toward companies that will make productive use of it and direct capital away from companies that will not. Just as index-fund investing defeats this purpose, so too does trading based on anything other than an evaluation of a company's underlying prospects for the future. That's why ideally CNBC would feature nothing but informative pieces on publicly traded companies, with occasional glances at the overall economic climate. Of course, its ratings would soon be turned into hash marks. Which might suggest that real business news is no more popular than it ever was.