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Does the media impact the markets?
Media professionals and academics say it certainly can. Journalists themselves say it’s the responsibility of those professionals who purvey breaking news to do it without bias so that audiences can draw their own conclusions based on the facts.
Arguably one of the clearest examples of this cause and effect recently was CNBC “Mad Money” host Jim Cramer’s animated appearance on the Today Show on Oct. 6. During his morning interview, Cramer said “Now is the time to panic,” advising viewers to take out of the stock market whatever investments they may need for the next five years. That day, the Dow lost nearly 370 points, followed by a 500-point lost the next day.
While other factors were at play during that same time - such as recent passage of Congress’ $700 billion bailout and a dour speech Oct. 7 by Fed Chairman Ben Bernanke - veteran journalists such as Bloomberg News editor Steve Geimann say perception is everything.
“Events such as Jim Cramer’s appearances on the Today Show must have an effect on the markets,” said Geimann. “In an interconnected society, when you’re reading the paper, listening to the radio, watching TV and surfing the Web, an issue as personal as your own money is already on your mind. As you’re already aware of the uncertainty of the situation, you turn to the media to get information. And when you have opinion givers, either touting stocks or fueling fears, it decidedly does have an effect.”
A former broadcaster and former chairman of the Society of Professional Journalists’ ethics committee, Geimann now edits content for Bloomberg News. The online financial news wire boasts 2,000 contributing journalists from around the world, uploading more than a thousand breaking news stories daily. He says it’s incumbent upon news gatherers and presenters, now more than ever, to be as “transparent” as they can be in providing accurate information to the public.
“At Bloomberg, that’s our mantra,” Geimann said. “We have to show them what we know using strong verbs and strong nouns, but without any hint of subjectivity. And we have to quote smart sources - such as traders and hedge fund managers - rather than ‘celebrities’ who are not close to the action.”
When news stories change rapidly, says Geimann, it puts enormous pressure on the media - particularly on broadcasters and online information providers - to report the story accurately and to stay on top of it as it evolves throughout the day.
“In a fast-moving environment, the responsibility is exponentially higher to not influence what people are doing,” Geimann said. “As a journalist - or as a source being interviewed by the media - you don’t want to be creating the story. You want to be dispassionately observing it. My opinion is that CNBC kind of treats a breaking story like a sporting event, where (at Bloomberg News) we tell it like a story with informed characters as witnesses.”
Dave Aeikens, a reporter at the daily St. Cloud Times in St. Cloud, Minn. and president of the Society of Professional Journalists, agrees that journalists are charged with the responsibility of being “accurate and measured” in what they say, regardless of whether it’s the stock market or any other news topic.
“As a daily newspaper that posts its content online in addition to the print version, we prioritize being right over being the quickest to break a story,” Aeikens said. “We probably make 30 to 50 updates a day on our Web site. That’s the culture of today’s dailies…it’s ‘break news online’ and update it in the print version,” he added.
The St. Cloud Times also transmits breaking news to subscribers via their cell phones and portable electronic devices such as Blackberries. But Aeikens says the advent of information technology shouldn’t change the basic precepts of responsible media coverage.
“The concepts of good journalism don’t change, regardless of what you’re covering or what technology your news organization is using to disseminate that information,” said Aeikens. “You still have the same obligation as always to be accurate, fair and tell the truth, and to do so with an impartial delivery. The whole idea is to provide information so people can react to it as they choose. We’re not worth much if we’re not accurate.”
Martha Steffens, a professor at the University of Missouri’s School of Journalism, also fills the endowed faculty chair in business and financial reporting for the Society of American Business Editors and Writers. According to Steffens, when the public is under duress, it tends to view the news through a different lens.
“When people are nervous, they seek all kinds of information on an issue from a wide array of sources,” said Steffens. “It’s human nature. When you’re nervous about something, you tend to seek more information and you may place more weight on pieces of it than you would under less stressful times.”
Jim Cramer’s warnings on the Today Show, Steffens says, potentially affect how a large, influential investing group perceives the market - the baby boomers.
“When Jim Cramer gets out there and says you need to pull out five years’ worth of income, you’ve got a situation where the leading edge of the boomers, those ages 60 to 62, have substantial dollars invested in the market. They’re clearly impressionable,” Steffens said.
Many members of the public don’t actively manage their own investments, according to Steffens; even the ones who do may not have a lot of confidence that they know how to navigate their dollars during these uncertain times. “That makes it even more crucial for the media and its sources to provide accurate, unbiased information right now,” she said.
Steffens, who teaches Business Journalism as well as Economics for Journalists, says today’s market climate has some similarities to the market’s fall in late 1987. “But here’s the difference: A higher percentage of the American public is invested in the stock market compared to 1987. Today there’s a democratization in the stock market that we didn’t see 11 years ago. There are a lot more rookies, due primarily to the surge in popularity of mutual funds,” she said.
Coupling the fact that 60 percent of Americans have some investment in the stock market today with the prevalence of computerized trading, Steffens says, results in a recipe for more market volatility.
“Now, more than ever, the public is impressionable when it comes to financial reporting,” she said. “We’ve got to be responsible in the information we dispense.”
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