Financial Flame War

One of the great issues of the age is the new-media/old-media debate. Over the last year, as I've slowly immersed myself in what is more properly termed "social media", I've seen it takes many forms. The most common is print journalism versus bloggers. Hardly a week goes by without a print journalist weeping over the death of newspapers. Recently, here in Reno, it took a generational turn with Myrna The Minx calling out baby boomers on their lackadaisical attitudes towards the many uses of the latest whiz-bang gadgets. But now, another front in the ongoing war has opened up.

In a lengthy, and well done blog post, John Reeder of Real Property Alpha examines the dispute between the CNBC meat-puppets and the financial bloggers. It's a much more balanced look than what you'll find here. In it, Mr. Reeder makes several good points. The first of which is;

Who would you rather get your information from? A reporter that might have gone to journalism school, or a professional trader/economist/investment manager?

I remember when the financial TV channels first made their appearance. The question of the day was; "If they're so smart, why aren't they on Wall St. making some real money instead of sitting in a TV studio reading the news"? It was a valid point then, and I think, it remains a valid point today. Many of the strictly financial blogs are written by people who are actively engaged in trading, or are professors of economics and so on.

Another good point Mr. Reeder makes:

The bloggers read each others entries, re-post portions of the entries, and add more comment on top. In theory the bloggers should be in competition with each other for reader attention, but in reality they benefit from powerful network effects of belonging to a group of financial bloggers that all link to one another.

The fact is, bloggers, of any stripe, really don't compete with each other, and financial blogs work the same as any other type. If you like one blog and that person links to another blog, that won't cause the reader to stop reading the first one. The reader will start reading both, and if both provide value, will continue reading both.

The idea that a simple investor like me would take on, say, Barry Ritholtz, in direct competition is insane. Mr. Ritholtz runs his own hedge fund. He writes books. Why wouldn't I look at him as a friendly source of information? To the extent that I understand what he says, I pass the information along. Why would he see me as a threat?

Which brings us full circle, back to the baby boomers and our lackadaisical ways. We've seen our retirements funds dwindle through two bubbles without a word of warning from the cheerleaders at CNBC. Any number of financial blogs were posting warning signs before the last one. Knowledge is power. You won't get knowledge from watching TV. For this boomer, the way into social media was through the financial blogs.