Like many of you, I read, watch and listen to all sorts of information coming from the financial industry and I am reminded of my first business. It was an entertainment magazine in New York City. We covered movies, music, television shows and announced what was happening in the local scene. Like everyone else in that line of work, we were basically distributing a magazine filled with dressed-up press releases. I learned a lot and made some money, but I would never say that I was a journalist. And even in my twenties, I got tired of being a shill for the giant media companies.
These days, when I see or read a so-called reporter interview with a CEO or tell me the latest words of wisdom from analysts and fund managers, I’m reminded of my magazine days.
It’s a different industry, but the same old story. Instead of journalism, all I see is promotion and entertainment. There is one difference, however. Big media was only using my magazine and other outlets to fill seats in theaters or sell some music. Worst thing that could happen is one of our readers might end up taking his/her date to a bad movie. There is a little more at stake in the financial industry.
Casual investors listen to the media and advisors tell them to diversify and not to worry about the day-to-day price fluctuations. They hear the constant refrain that over the long run, everything will be fine and we’ll have a 7% average return. But while the average investors aren’t worrying or paying attention, hedge funds are shorting their stocks, and working hard using the media, including Google to influence people to make the share price go down so they make billions.
If those average investors are lucky, their stock might eventually recover. But for some who are not so lucky, their stocks may be driven all the way to zero. Some companies go bankrupt, and people lose their money and some will lose their jobs.
There is a battle going on that could have big implications for millions of people. Hedge funds versus retail investors. And where do the media conglomerates fit in?
It’s a real David and Goliath story. There are millions of retail investors, lovingly referred to as ‘APES’, who are using Twitter, Reddit, Discord, YourTube, etc. to communicate and support each other as they battle the mighty hedge funds.
Big media dismisses them, condescendingly referring to them as “The Reddit Crowd” and their stocks as “meme stocks”. In our world dominated by media giants, you may not know much about them but I have been paying attention to them. They are people from all walks of life. Some young, some old. Some can afford 5 shares and some 50,000 shares. Politics gets shut down and respect is widespread. Although some are jokesters, none are dumb. They know what they are doing and they are having fun doing it.
AMC Theaters has been one of the most shorted stocks [FULL DISCLOSURE, I own AMC stock as well as a few other companies that are being attacked by shorts.]
Last year, one Wall Street analyst, Richard Greenfield, said that AMC will be worth one penny. If you do a search, you will find that almost every financial media outlet rushed to print his opinion as truth. Barrons, Seeking Alpha, Motley Fool, and Investopedia all regurgitated Greenfield’s story about AMC going to a penny, almost verbatim. Maybe Greenfield knows something I don’t know, but did any of these folks do any research on their own, or even look to see if there was a contrary argument to share with investors?
Now shorting stocks is nothing new. It’s been happening, for a long time and one can even argue that shorting, at least a limited basis has some merit. According to lnvestopedia, ”Nothing is inherently wrong with short selling, which is permissible under the regulations of the Securities and Exchange Commission (SEC). However, the ‘short and distort’ type of short-seller uses misinformation and a bear market to manipulate stocks.”
Imagine, you go to a movie theater and are impressed with the operation. You think, ‘I like this company, maybe I will invest in it.’ Then you do your due diligence and all you see are negative news stories with the same headlines over and over. Pretty easy to influence someone’s decision.
In closing, I don’t want to indict every publication, website or financial investigator. I am sure there are some good ones out there somewhere. I would like to se more of them tell all sides of these big stories.
As ‘The Apes’ fight for time and attention, hopefully, they’ll bring some truth and transparency into the financial media world. As I think back on my entertainment magazine, I really hope they succeed, because a world of information built on regurgitated press releases from financial media giants will cause a lot more damage than a disappointing night at the movies.