Books Discussed in this Review:
Restless Genius: Barney Kilgore, The Wall Street Journal, and the Invention of Modern Journalism – by Richard J. Tofel
War at the Wall Street Journal: Inside the Struggle to Control an American Business Empire – by Sarah Ellison
Investors never actually experience firsthand most of what they act upon. The vast, vast majority of information is obtained secondhand—via newsfeeds of all sorts, be they scuttlebutt (that Phil Fisher favorite), blogs, TV, newspapers, journals, magazines, even Twitter. In some sense, financial statements are a kind of secondhand account—10Ks, earnings calls, and balance sheets are not direct experiences of a company and its goings on. They're descriptions; not the thing itself, but something describing the thing.
Sometimes (actually, often) a secondhand view can be quite useful. A well-wrought story distills and focuses otherwise chaotic events as they happen—it makes sense of things for you and highlights the important features. That's the ostensible function of journalism—objectivism but also a better shaping of things for more efficient understanding.
That's in theory. At this point, we're all well aware of the inherent biases and subjectivity of any publication. This gets to one of those philosophical issues that has major practical implications for investors—is it possible to get clear information to make cogent decisions out of secondhand accounts like newspapers? Is it possible to really "know" what's going on in the world just by sitting in an office and reading words on papers and screens?
Mostly, yes. But the onus is still on the reader to get to the "truth"—that is, one cannot leave all the interpreting to the journalist. Particularly in the internet age, there's no doubt in my mind it's possible to obtain all the needed information to successfully invest globally. And it's mostly free of charge, for that matter. It takes work though. For one thing, the right information's not all in one place—you've got to read a wide variety of stuff. Also, you must be constantly vigilant of the content you're reading. Journalism and news generally are by definition a selected presentation of facts—there's no way to communicate all the information. That means all journalism is subjective. Just the editorial choice to run a story at all is a choice. So an investor cannot sit back and ask the world to tell him/her what is important—they have to make that determination themselves and seek it out within the sea of information.
But there's another factor. An investor doesn't just need to know the right information to invest, an investor must also know what the world is thinking. It's a reflexive kind of activity, what I call in my book 20/20 Money being "the layer on top of the layer." You don't just have to know; you have to know what others think about what is known. That's because all investing is relative—most known or widely believed information is already reflected in prices. To make a market-beating investment, you have to determine what's not reflected yet in a price. So reading the news is also about seeing what the world is thinking—what the most salient issues are; who's saying what, and why.
On that basis, there is no more indispensible, indubitable investing resource than the Wall Street Journal. Any and every serious investor must read it daily (even Saturdays). It's what the investing public reads and therefore is what you must read to know what others are thinking.
Barney Kilgore took the Wall Street Journal from a glorified newsletter to one of the best journalistic periodicals in the world. A cub reporter in the Depression era, Kilgore did everything at one time or another—from editorials to on-the-ground political reporting, from economic analysis to earnings analysis.
Kilgore hailed from South Bend and had ties to Notre Dame and the country's robust middle—very American, workman-like, a Calvinistic/puritan worldview. He valued hard work and long hours as virtues in themselves. Yet he was an adventurer and regaled himself in the adventures of city life—from San Francisco to New York.
As a reporter, he cut his teeth in the Depression and covered the ailing banks, reporting heavily on complex regulations like the Glass-Steagall bill. His market education was almost purely experiential (no textbooks here). Not just following the news, but commenting and reporting on it as Kilgore did, hones you, toughens you, sharpens your investing mind. For me, there was no faster or better learning process I underwent than my days editing MarketMinder and writing our daily commentary.
Kilgore came all the way up through the ranks: he wrote, edited, and published at the Journal. Mostly, he was a visionary and innovator. All those little things the Journal is famous for—the front page "What's News" column which briefly highlights the day's important news, the daily "Review and Outlook" editorial section, known for its biting political wit—all came from his mind. He saw the paper go national, then international, and its basic form is still retained today.
His ideological roots skewed heavily toward free markets. He believed in Irving Fisher's insights (even after his disastrous prediction of further and indefinite stock market climb in 1929). Kilgore believed markets ultimately held more wisdom than the individual and were the only possibility for forward information about the economy. Indeed, amid the deluge of information available today, the market is still the surest forward indicator of the economy. All that ethos still exists in the paper now.
But part of Kilgore's charm was his dual mission to educate and entertain—he wanted the Journal to be a thing regular folks could read to both enjoy and learn a few things about the vagaries and intricacies of the economy. This attitude is what allowed him to shun tradition and innovate the paper into prominence. These days we think of it as an institution, but its roots are about unconventional-ism. Enter Rupert Murdoch.
Many view Murdoch's purchase of the Journal in 2007 as an atrocity of the paper's independence and integrity. I say hogwash. Both Dow Jones (publisher of the WSJ) and the New York Times Company were/are majority-owned by families (the Bancrofts and Salzbergs, respectively), and, as such, over the decades have become stodgy, turgid, anti-innovation publications. These were dying animals. True, the Journal was the only major newspaper to successfully get its readership to pay for online access, but that was more a function of its indispensability as a business resource than the paper's innovation.
I think Kilgore would be much pleased with Murdoch so far. Murdoch has already livened the paper by adding more color photos (something the New York Times for years has done better), decreased the width of the paper, and mandated more international and political news. These are all to the good, especially tied to Kilgore's desire for the WSJ to be the de facto paper of the US. Kilgore believed any well-informed citizen should understand business, the economy, and how markets work.
These days, the Journal is gaining in circulation and subscribers. But make no mistake: The newspaper business is rough, competitive, and has been in recession for more than a decade. In order to survive blogs and the Internet, newspapers have had to jettison high-cost talent and experienced journalists/editors for cheaper, less experienced writers. The average age of a writer for the Journal these days is much younger than ever before. This creates a problem of perspective—headlines seem to take a more breathless, sensational overtone from those with younger pens. Indeed, the panic of 2008 may well have seemed and felt like the end of the world to those reporting their first true downturn. Even the emergence from the most recent recession seems something of a revelation, when it's really part of a very normal cyclical pattern through time. Murdoch, a businessman first, has surely taken advantage of this cheap labor, and in an era where newspapers must compete with so many new sources of information, he probably also doesn't mind a little higher sensationalism, too, to move papers.
Beyond that, the Journal is no less good than it was before. Yes, the ideological bent of the publication will out no matter what. But the WSJ was well known as the most conservative of the major papers long before Murdoch anyway. It's hard to believe editorial and op-ed veterans of the Journal like Henninger, Jenkins, Stephens, Noonan, and others, can get any more free market than they already are.
Here's one man's strategy for WSJ reading:
If you only have five minutes, read the front page, especially the "What's News" section. The major economic releases and political news are all there. (But remember it's a newspaper, so anything that happened in the morning won't be in the paper till tomorrow. The online edition is updated constantly though.) Then skip to the "Review and Outlook" at the back of the "A" section. This will have a right-wing bent, but will tell you immediately the salient political/economic issues of the day.
If you have 15 extra minutes, read the op-eds. The most important economic and business personas in the world write there. Barack Obama did just a couple weeks ago. So do Treasury Secretaries, foreign heads of state, prominent CEOs, and so on. Their views shape policy and the economy.
If you have 30 minutes, read the entire "A" section—which is global news with an economic skew.
If you have 45 minutes, also scan the Marketplace and Money and Investing sections. But even if you have a lot of time, still skim these unless something really catches your eye that's pertinent to your own dealings.
If you can round out the hour, it's well worth looking through the market data at the back end of the Money and Investing section. Take one small piece a day, as possible, and figure out what all that stuff means. Within a few months you'll know all about options markets, forward commodities contracts, bonds, stocks, funds, and so on.
Generally ignore the Personal Journal section. There's seldom much there of interest outside mundane fare and pieces about the art and high-end real estate markets to make people feel finance can be cultured and sophisticated.
If you can't read the weekly edition, the weekend Journal has really improved under Murdoch. It's a great rundown of the week's action, and the new book review section is starting to come into its own with some of the best critics and voices commenting.
Most importantly for serious investors, no matter what, subscribe to the thing and at least scan the headlines daily. Make the time. Even for curious citizens, there are few better avenues out there for the daily news.