Biz magazines are to blame for investor's problems

If business magazine coverage is a contrary indicator of what to invest in, then 2008 will go down as a great year for ignoring what they say, writes Ryan Tate of Gawker.

Tate notes that Fortune‘s December 2007 issue recommended that investors buy Merrill Lynch stock, and a BusinessWeek column from April recommended investing in Lehman Brothers.

Tate adds, “In April, Forbes published a cover story about Merrill Lynch CEO John Thain, headlined ‘No Thain, No Gain.’ Like Fortune, Forbes spends a lot of time talking to the executives it covers, and angling for access. It has been known to churn out plenty of hagiography, if not as steadily as its competitor, and the Thain piece edged into that territory: Thain was compared to Superman’s alter ego Clark Kent, called the ‘Mr. Fixit’ at his last job and described as ‘athletic’ and ‘coolheaded.’ Even his facial expressions were reassuring, with a grin that ‘says, No need to brace for disaster.’

“Some of those compliments held up reasonably well, given that Thain managed to sell Merrill just in the nick of time, and at a point when two similarly-troubled competitors could not find buyers.

“But then Forbes‘ Daniel Fisher had to go and write, ‘Aside from its obvious troubles—afflicting all the largest financial institutions (see chart)—Merrill is in damn good shape… Part of Thain’s job, like that of a good physician, is to do no harm. Meaning: Keep the cash machine going…’ Whoops.”

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