Investment Advice from the Money Honey

Use the News: How to separate the noise from the investment nuggets and make money in any economy
By Maria Bartiromo, with Catherine Fredman

CNBC anchor Maria Bartiromo is one of the most visible personalities in the New York business community. Her Sofia Loren looks and well-heeled audience, have Wall Street's biggest players scrambling to share on air face-time with her.

Though she doesn't do much investing herself, Bartiromo has developed considerable smarts from her work covering the business world. These she shares with readers in her new book Use the News: How to separate the noise from the investment nuggets and make money in any economy. But while Bartiromo is a master of the camera, her style does not translate nearly as well in print.

"In the decade or so that I've been reporting on Wall Street and business news, we have seen and explosion of information about investing, the stock market, the economy and personal finance," writes Bartiromo, who the New York press have nicknamed the "Money Honey."

"We see it in the myriad of magazines and newspapers, Internet sites (352,000 at last count) and television programs with reporters like me, who make it their business to ensure that the news that will affect your investments tomorrow is in front of you today."

Use the News is Bartiromo's attempt to give individual investors the heads-up on which of that information, is "news" that will affect investments, and what is "noise," - puffery which that merely distracts attention.

For example Bartiromo believes that trying to predict Federal Reserve Board actions on interest rates- a favorite Wall Street pass time - is noise. Though short-term rate fluctuations are key factors influencing market performance, it's far better to focus on the long-term picture. In fact, though many CNBC viewers are day-traders, Bartiromo frowns on the practice.

More important are the economic reports the Fed relies on to determine policy. Among them are the U.S. Department of Labor's Employment Report, the Consumer and Producer Price Indexes and consumer confidence surveys.

Company earnings reports and inter-quarter guidance are news, but whisper numbers -- which can be arbitrarily influenced -- are noise. So are company announcements about new contracts, which should not be a big deal since they are a routine part of doing business.

Like the network she anchors, Bartiromo's book has a big potential audience. Investing, once the exclusive purview of a select group of professionals is now a mainstream activity in the U.S. The number of Americans now owning stocks directly or through mutual funds has doubled in the past two decades 85 million according to New York Stock Exchange.

But while Bartiromo is clearly a star performer who eats up the camera on a very popular network, her writing style is very much a reflection of CNBC itself: all sound bite and little perspective.

Much of this is a product of her educational background. Her university major was in journalism rather than finance. Though she took economics elective courses, it's hardly an environment conducive to deep thought about investment strategy.

Another problem is the snappy CNBC format. The three-minute interviews the network is famous for give just enough time for Wall Street pros to rattle off two or three talking points. But they leave little opportunity for insightful follow-up questions.

Bartiromo's book -- like her CNBC segments -- thus comes off as interesting tit-bits, but no context. For example there is little about bonds, nor the importance of determining the appropriate fixed income/ equity asset allocation in a portfolio.

There's a big credibility gap. Bartiromo can't buy stocks in the individual companies she covers because of the inherent conflicts of interest involved in her anchor job so she has almost no hard investment experience.

It's like taking bullfighting courses from someone whose only knowledge comes from watching the sport. The lessons about how to work the cape may be great. But its someone who has never been there can't easily convey how to react, when the bull lowers his head and aims his horns straight at your gut.

Use the News is filled with interesting tips on understanding the media game and its relationship with the markets. But the book's lack of focus on a strategic framework leaves the reader more confused than ever, and hardly delivers on its promise of demonstrating how to make money in any market.

 

Peter Diekmeyer is a Montreal-based business writer. He can be reached at peter@peterdiekmeyer.com

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