“THEY SAY, ‘TRY TO BE HIP, AND THINK LIKE THE CROWD’, BUT NOT EVEN THE CROWD CAN HELP ME NOW…”

1/27/10

As I was shaving this morning I was tuned to WBBM Newsradio 78, Chicago’s only remaining (almost) all news radio station. Newsradio 78 is a great station (as is WGN 720 in Chicago, which does not pretend to be all news and so is exonerated from the criticism of WBBM that follows), but its touting itself as all news is a serious misnomer. Its tag line is “All News, All the Time,” but truth in advertising would dictate modifying that line to “All News, All the Time, Except When the Bears are Playing, when we are Almost No News Anytime.” I can understand the station’s desire to carry Bears games; such games are probably one of the station’s biggest money makers. However, I don’t understand why fans need a three hour pre-game show and a two hour post game show for every exercise in futility known as a Bears game, or a Lovie Smith show for an hour every Monday night, in which Lovie explains away the latest disaster and tries to make an apparently convincing (at least to the McCaskeys) case for keeping his job. This turns a three hour game into (at least) an eight hour broadcast marathon every Sunday, during which WBBM’s news operation is shut down except for two minute snippets at the hour, but only during the pre and post game shows and at half time, and cuts into Monday night newscasts. “All News, All the Time”? Hardly. Other than that, though, WBBM is a wonderful resource, and true all news stations (unless one considers Rush Limbaugh, Dr. Laura, Sean Hannity, Ed Schultz, and Stephanie Miller “news,” as, apparently, “news/talk” stations do) are becoming a rarity on our national landscape. Once you get beyond WBBM, WCBS and WINS in New York, and maybe WWJ in Detroit, you’ve pretty much exhausted the pack. But I digress.

One of the programs featured on WBBM in the morning is “The Osgood File,” with Charles Osgood. I generally find this snippet entertaining and informative. This morning, Mr. Osgood reported on a professor from Yale (Unfortunately, since I was shaving, I didn’t have a pen handy to write down the professor’s name and my memory isn’t what it used to be, especially when cluttered with all the things I think about when shaving. Since I couldn’t find a link to the Osgood file on WBBM’s web page, I could not salvage his name that way, either; sorry.) who was discussing political robo-calls, those annoying calls we all receive at all hours of the night and day during election time from pols seeking their first, or a better, position at the public trough. The professor concluded that these robo-calls are not cost effective; in fact, he found that they were not effective at all and, indeed, may be counterproductive in that they irritate potential supporters. I concur; it is almost to the point at which I will take down the names of pols who hit me with robo-calls so that I can punish them at the polls.

The professor went on to ask the obvious question: If these robo-calls are counterproductive, why do pols engage in such calls? He concluded that politicians engage in these annoyances because everyone else, including their opponents, do so, and (This is the especially profound point, but I can’t quote it (again, that listening while shaving thing), so I will avoid quotations marks):

No one gets fired for doing what everyone else is doing.

The professor, probably unwittingly, since he wasn’t speaking of investment matters, thus makes a point I have been making for years. The reason that what passes for “investment advice” from the “experts” is so useless, and the reason that consensus is so easy to achieve in the field of economic and financial prognostication, is because

No one gets fired for doing what everyone else is doing.

The reason that most portfolio advice we get amounts to “Put everything in stocks and you can’t miss for the long run,” (until recently) “Real estate cannot go down in price; why, they aren’t making more of it,” “money market funds and bonds are a chump’s game,” or “Never bet against the American markets” is because the investment world, with the help of the omnipresent financial media, has become a massive echo chamber. The reason very few people (You are reading one of them.) saw the big crash of 2007-2008 coming is because there is safety in going along with the crowds. If an “expert” predicts continued growth, continuing low inflation, great real estate and stock markets, and a treasure trove of massive wealth for everyone who has the patience to wait for the long run (whatever that is), he or she cannot possibly lose his job. “After all, boss, all the other distinguished experts were calling for slow, but steady, growth and continued negligible inflation; how can you single me out?” or “Everyone else borrowed heavily to buy worthless CMOs; how can you blame me?” or "Everyone else said the stock market would clearly outperform the alternatives; how could all of them have been wrong?" or "With money funds paying no interest, you have to go into stocks if you want to get any return on your money; who could possibly argue with such a well reasoned strategy?"

It’s not that the experts are all stupid people; it’s just that they are engaging in the age old tactic of covering their posteriors. They have very good jobs, and some even realize that they are paid well beyond what they produce, or are even capable of producing. If they stick their necks out, they might be faced with the prospect of having to get jobs in which they will be required to do real work for real world wages rather than opining with no accountability for pay packages of which most people cannot even fantasize. Why take a chance? Go along with the crowd; what the heck, it’s not their money that’s at stake.