How the Media Uses Buffett to Make Money
Politics / Mainstream Media Jun 27, 2009 - 03:53 AM GMTBy: Mike_Stathis
In the previous part of this article we saw how what Buffett invests in doesn’t matter to you.
Let’s look at an example how the media uses the Buffett name to make money. I’d like to direct your attention to a story by Reuters, published on August 22, 2008. “Buffett Sees Weak Economy Until 2009”
Surely this is no news. Let’s see now. It’s the end of August, so there are four months left until 2009. A person would have to be a complete fool to think the economy would get better prior to 2009. But the fact is that the investment world consists of a lot of fools who have been brainwashed by the media.
I’ll assure you that any possible improvements to the economy in 2009 won’t last. I expect 2009 to be worse than 2008. In early August, I actually released an article online titled, “Get Ready for the Earnings Meltdown,” which cautioned investors that the real pain was ahead. And I was right. I was ahead of the curve. If you can learn to position yourself ahead of the curve and do it with consistency, you’ll be well on your way to riches. But don’t get your hopes up. It’s an extraordinarily difficult goal to achieve with consistency.
By my forecasts, the economy won’t show any real signs of improvement before 2011. But in this article, Buffett implied the economy will no longer be weak in 2009. So how could such a great investor be so blatantly wrong? Maybe he’s really not as good as you thought. Or just maybe, he’s trying to alter consumer and investor confidence so his investments will fare well. Maybe it’s a combination of both. You decide.
Either way, I hope you see how useless this article is. Unfortunately, it’s a typical publication from the mainstream press. Remember, the media is only concerned with selling ads. The Buffett name delivers that. And Buffett is only concerned with doing his job well. Buffett cares about helping the average Joe as much as Wall Street and the media.
Notice the picture of Buffett in the article. His image mimics a physical presence. He’s right there looking at you while you read the piece. If you’re like many sheep, your subconscious is saying, “Wow Warren Buffett, the ‘greatest’ investor in the world is speaking, so I’d better listen carefully. Maybe I can make money if I read what he has to say.” This is precisely what the media relies on; millions of sheep hoping to read some “wisdom” from one of the financial celebrities they’ve created.
Now, check some of the other results from the online search. Notice the various news services that picked up the story. Go through and click on a few of them. Notice the ads in the article. Let’s see, we have Charles Schwab here and E-Trade there. Oh, and there’s even one for Bank of America, etc. What a surprise. Folks, this is really what the story is all about. Get an interview that has no real insight from a big name investor and post ads there. The potential for big ad revenues provides the real incentive for the media to make Buffett into a superstar.
The same goes for Jim Rogers, George Soros and everyone else they hype up. The media plays the same game whether it’s with investments or Hollywood. Hollywood’s marketing strategies are just as effective for Britney Spears and Paris Hilton as they are for Warren Buffett.
If you look at the same article on Reuters’ website, you won’t see these ads. But that doesn’t matter. When the story hits syndication, each website can put in its own ads. In many cases, ad firms post them by automation. So having the name “Buffett” in the headline is more appealing to each site because it promises more viewers and thus more ad revenues. If you can’t find this specific story I’ve mentioned (some sites remove articles eventually) it really doesn’t matter. You can do a search for “Buffett” and “Economy” and go through the same process.
Remember, these news services sell articles to vendors who place ads throughout the article when it’s posted on their website. So the real value of each article is based on its potential to generate advertising revenues. Website traffic drives ad revenues. And “celebrities” drive website traffic. That’s precisely why you will rarely see me quoted in Reuters, the Associated Press or any other publication.
Their bias for advertisements precludes them from painting the full picture. Some publications focus more on political agendas; others focus on financial agendas. Either way, agendas are agendas. Agendas create bias. And you’ll never get the truth when they are present.
So when you fail to see ads on Reuters, the Associated Press, Bloomberg, etc., don’t think for a second that financial agendas aren’t the primary determinant of who they interview. The real money is made from syndication deals to other sites that customize the article with ads.
If you bother to look, you’ll see this same kind of manipulation everyday. Sometimes it’s much worse. That is, sometimes the “big name” distorts things so far off on the deep end that you can lose a lot of money if you listen to them. So remember to focus on the substance of the article, if there is any. You should be able to sort through the bull and find value if it’s there.
If you ever see me quoted by a publication, you should assume they’re not using my entire quote. Most likely they’ve cherry-picked what they want to use to paint the picture they want. This can easily hide the message I wanted to deliver. How do I know? Because it’s happened to me in the past. In fact, reporters can take things out of context to the extent that the message they deliver is the exact opposite of what the interviewee intended. This is not only unethical, I consider it potentially illegal. Reporters almost always pick and chose who to interview and what to use from an interview based upon what bodes well for their sponsors.
The situation is much worse on television, especially with the financial networks. Just ask yourself the following question. Did CNBC warn you to get out of the stock market in 2000? Did they warn you to get out in 2007 or even early 2008?
Even having one or two guys talk about potential problems here and there doesn’t provide real value to viewers because in terms of the percentage of airtime, at best it’s only one percent. Media executives know that the more something is repeated, the more people will believe it. That is precisely why they flood the airwaves with the same bull.
In defense, media executives might claim they air counter viewpoints. But viewpoints comprising one percent of programming time are meaningless because there was no repetition. Repetition creates validation. And when they do air those who have counterpoints, the host usually turns the segment it into a comedy in order to diminish the seriousness of the message.
Alternatively, they’ll have three or four Wall Street hacks go up against one guy who is ahead of the curve. There are several other tricks they use. The thing to remember is that they always work to deceive viewers. They only care about their sponsors – the financial industry, because they pay the bills.
You certainly won’t see me being interviewed on television because my straight-talk truthfulness wouldn’t be good for business. It’s all about maximizing advertising revenues. And the media uses selective censorship to achieve that mission.
Media companies want to sell ads because that’s how they make money. So they air content that helps them achieve this goal. The problem is it creates misaligned interests between their audience (you) and their sponsors (corporate America). For financial shows, the audience is Joe investor, while the sponsors are financial firms. That’s why you only get one side of the picture; the side that most often favors Wall Street while leading you to big losses.
Only after things have cratered does the media begin to present the reality. By then, it’s too late. You’ve already lost a good deal of money. Even then, they tend to sugarcoat things knowing you’ll still watch; knowing you have a short memory. But if you stop watching, they’ll be forced to eventually air credible experts with timely and accurate guidance because, without viewers, they won’t be able to sell ads. Ultimately, you are to blame for your investment losses if you watch the financial media networks.
Interested to see how Buffett uses the media to make money? Here it is http://www.avaresearch.com/article_details-146.html
By Mike Stathis
www.avaresearch.com
Copyright © 2009. All Rights Reserved. Mike Stathis.
Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.
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