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Berkshire Hathaway chairman and CEO Warren Buffett will testify Wednesday at the Financial Crisis Inquiry Commission. Mr. Buffett's company is Moody's largest shareholder.


If you are a little skeptical of what a journalist can do for your investment portfolio, you're not alone. Journalists themselves tend to be skeptical of their own stock-picking skills, if only because our own investment portfolios are too small to suggest any particular investment prowess.

Mark Gimein, writing The Big Money column in Slate, makes a number of interesting points on why journalists are terrible stock pickers. While most of them ring true to this hack, Mr. Gimein's points aren't all negative.

His first point: Journalists have a big prejudice toward value investing. "Our jobs are to analyze the truth of what's going on in an institution-whether a corporation or a government agency-and separate it from 'the hype.'" I think he's spot-on there, but that's not always a bad thing. Quite often, it's a good thing.

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His other strong point: "Reporters want to tell people something they don't know, not just repeat what they already believe. A sharply rising share price for a big company generally reflects popular admiration for the product, the brand, and the chief executive. Often that admiration is fuelled by the business press. It's an odd process in which publicity begets popularity, begetting, in turn, press discussions of the hype itself. In picking stocks, reporters like to try to insulate themselves from public perceptions about a company. Otherwise we'd just be telling people to buy shares in the companies that they think are great, right? That, however, might not be such a bad idea."

Again, he's right, at least about the part that reporters want to tell people something they don't already know. However, I think this is also the great part about being a reporter and at least listening to what a reporter has to say. By bringing a new view about a stock, reporters help shake up the consensus. That's valuable, isn't it?


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About the Author
Investing Reporter

David Berman has been writing about business and investing since 1995. He has written for a number of magazines, including Canadian Business and MoneySense. He worked at the Financial Post as an investing writer and daily columnist before moving to the Globe and Mail in 2008. More

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