Influence of media

One of my first blogs was how media can make or break an institution.
Today, I would like to extend this to individuals. Every morning when we wake up, the first thing we read is the headlines from our local daily. Does it determine our mood, our outlook for that day?
Take for instance, a sample of gloomy headlines that fill our newspaper these days:

• Recession reports: 1300 firms file for bankruptcy
• Asian stocks go for a free fall
• Industrial output fells sharply
• Consumer confidence at a decade low
• A NY broker commits suicide because of losses

How does it make you feel? Even though your job might be perfectly fine, your company might be doing very well, your personal life is in full balance; yet somehow these news creates a negative impression in your mind and we all know negativity creates a vicious cycle taking you further down.

Just last week, I came across a forward email in which a person has a small lunch takeaway in the heart of Wall Street. His business is going great (after all whatever be the market condition; every one is going to have a quick bite at lunch). Suddenly his educated son appears and advises his father to reduce his production as there is recession in market. His father does so; Now the takeaway shop runs out of food earlier and lot of customers have to return hungry. The word spreads and people start refraining from going to the shop fearing they might not get lunch. This reduces demand and the father reduces production further thus creating a cycle. In the end… demand is low and lower is the supply (Impact of recession????)

Well the story might not have any linkage to what I started blogging about; but the bottomline message is same and very clear. Simple things like your daily newspaper; your dinnertime news channel influences how your day shapes up. Though its good to know the facts and whats happening in the world; its even more important to project them in a balanced manner; An individual should assimilate information to the extent he is impacted by the same…

Media can make or break an institution

I didn’t know my second blog would be so soon given the time I took to write my first one!

But anyways, this time I have a topic to talk about, so I am sure some of you who read the first one and were quite disappointed might have something to read further

Just like me, I am sure most of the other small – time investors use simple tools like html alerts to brief them on the updates, trading results, quarterly performances of the companies of their interest.

Today, one of my favourite companies declared its results and I got multiple alerts on their performance. Let me list the top heading for all the alerts for your simple reference before I move on as to what I am trying to say here in this blog:

• XYZ Falls on Conservative Outlook
• XYZ falls 2%
• XYZ Maintaining Prudently Cautious Outlook
• XYZ posts strong Q1
• XYZ Net Profit Gained 21% in First Quarter
• XYZ surprises with 20.7 pct profit growth

Same company; same results; same quarter; same history; yet different way of projecting by different media sources;

I did a bit of further research on the same organization by the same media sources by looking at the last 4 quarter results and how the same media sources have been declaring it. Well the comparison for me was pretty astonishing to say the least!

The first three always presented a negative outlook on the company while the rest maintained a positive image.
If I did my own analysis of the financial results of XYZ, the results were pretty consistent every time; yet I was seeing different opinions and not just once or twice but pretty much everytime

And the measures for such different outlooks were quite simple. The financial results / ratios can always be presented the way you want. Just take the ones that appeal you and ones that do not. You can take the y-o-y, q-o-q, last 5 years, revenue comparison, stock performance, net profits, gross profits and if nothing else, compare it with market expectations (which I am sure is as varied as someone can imagine)

It is said that an average reader spends just 20 mins on a newspaper these days. Well I am sure in today’s busy climate and information overloads, it’s even lesser than that. We end up reading just the highlights or max the first 2-3 paragraphs of any news piece. And not just that, we all have one or max two favourite media source where we pick up all our daily dose….What happens if that 1 media source is biased towards someone.

And this is nothing new! I am sure everyone is aware of so many scandals where media stock columnists had their vested interests in certain stocks and hence their opinions were always biased. And why just companies, even at a political climate level, media sections are biased towards certain political parties

I am not going to write a full blown article or do a spoofy investigation on this but my main point through this blog is: Media can MAKE or BREAK an institution; Media should be unbiased but usually it is not; Think over it and do a bit of more research before trusting the source or making a decision

Cheers!