Gasparino: Covering Wall Street is like watching a big party
As the on-air editor at CNBC, Charles Gasparino reports on the markets throughout the day and has broken some of the biggest stories in the past few months.
He is also a columnist for Trader Monthly Magazine, and a freelance writer for New York Magazine, Forbes and other publications.
Before joining CNBC, Gasparino was a senior writer at Newsweek where he broke major stories involving politics, Wall Street and corporate America. He also coveredÂ Wall Street, pension funds, mutual funds and regulatory issuesÂ for The Wall Street Journal.
Gasparino was nominated for the Pulitzer Prize in beat reporting in 2002 and won the New York Press Club award for best continuing coverage of the Wall Street research scandals. In 2003, he was nominated as part of a team of reporters for the paperâ€™s coverage of the New York Stock Exchange, and the resignation of its former chairman, Richard Grasso.
Gasparino has won numerous business journalism awards, and he is the author of the book, “Blood on the Street,” which was a BusinessWeek bestseller and was listed by Barronâ€™s as one of the best business books of 2005. His latest book, “King of the Club: Richard Grasso and the Survival of the New York Stock Exchange,” about the New York Stock Exchange and Grasso, published in November 2007.
Gasparino talked via e-mail to Talking Biz News about his business journalism career. What follows is an edited transcript.
1. How did you first get interested in writing about business?Â
My parents weren’t exactly thrilled with my career choice. They were working class people — my dad worked in construction, tended bar and drove a taxi, my mom worked in the local dept store –Â and the last thing they wanted was to see their son go to college and make the same lousy salary as they were scraping together.
So as a concession to them as an undergrad, I began taking a few business classes, and an economics course so just in case my dream of becoming a big-time reporter failed — I was reminded almost daily that it probably would –Â I could rewrite company press releases or brochures for IBM.Â
Then something interesting happened. First I found out that I was actually interested in the business-related stuff, particularly economics. When I went for my masters at the University of Missouri J-school, I took a bunch of econ classes, four undergrad classes I believe, everything from money and banking to macro, and I thought I really discovered how the world works.
Then I realized that pursuing a career in journalism, particularly business journalism wasn’t so absurd after all. It was the 1980s, and the demand for good business reporting was growing. I interned for the Newsday investigative team run by one of the best investigative reporters of the past century, Bob Greene, who made his mark covering the Mob and various political scandals and won two Pulitzers in the process. Working for Bob Greene was amazing; not only was he a killer reporter but he also the best business reporter I ever worked with. Greene used to tell people to follow the â€œthe paper trail,â€? but it didnâ€™t take long working with him before you realized that what he really meant was to follow the money trail. Greene may have made his mark investigating the Mob and sleazy government officials, but he knew that organized crime and corrupt pols needed legitimate businesses and banks to launder money that made their criminal enterprises work. I spent more time reading balance sheets and income statements than interviewing people, and it was the best training I ever had.
2. You paid your dues at places like the Tampa Tribune and Bond Buyer before you hit the business journalism big time. How did that help you?Â
You forgot “Bond World,” the “Community Current” and “The Peekskill Herald.” One of the tragedies about modern journalism is that many of the kids who come out of school today no longer pay their dues at small paper or newsletters where they can learn the craft and make a lot of mistakes without the whole world knowing. I get the impression that too many kids out of school want short cuts — a job at CNBC before they even interviewed a single investment banker or read an income statement.
Theyâ€™re taking the easy way out: Many are becoming bloggers; they can cover big issues without any editing. Most of the reporters in my generation spent a long time in the minor leagues cranking out stories, getting screamed at by my editors, and occasionally kicking the crap out of the NY Times and the WSJ. We also made a lot mistakes along the way — we still do though with much less frequently –Â and learned from those mistakes. I’m far from perfect even now, but I look back at those years and thank God I had that training.
3. What is so attractive to you about covering Wall Street and investment banks?Â
Covering Wall Street is like covering a wild party. These guys and (and increasingly women) appear as if they’re the most sophisticated, proper, well-mannered people in the world. And they ainâ€™t. Theyâ€™re insane. Reporting about this insanity is the best job in journalism, and anyone who wouldnâ€™t want to cover crazy powerful people has got to be crazy themselves.Â
4. What adjustments did you have to make in your reporting in going from the Bond Buyer to the Wall Street Journal?Â
I was lucky enough to work as a reporter, as opposed to my earlier internship, for New York Newsday for a short time between thoseÂ two jobs which helped with my transition. New York Newsday was by far the best place I ever worked. The people were great from the reporters to the editors. There was also a premium on doing good work and getting it right. I would have stayed there forever if the paper didnâ€™t go out of business.
But when it did I landed at the Wall Street Journal. The Journal was a great place to take your career to the next level — to understand how to write narratives and report at a very high level. A lot of new reporters who come from tabloids get intimidated by the process, which at the time was grueling; proposals to get on page one; proposals to get stories on C-1, editors killing stories because they thought they were poorly written or not well sourced, or they just didnâ€™t trust the reporter, which happened to me more than a few times.
The reporters who stay at the Journal just roll with it, and thatâ€™s exactly what I did, with the help of some very talented editors — Gay Miller and later Mike Siconolfiâ€”who made me the writer and reporter I am today. To be honest, there were plenty of jerks at the Wall Street Journal, and to survive there you have to be somewhat of a sharp-elbowed jerk yourself — just ask some people I worked with. But I learned a lot there, and for that I’m grateful.Â
5. What’s the difference in covering business for the Journal vs. The Tampa Tribune?Â (Disclosure: I replaced Gasparino on the Tribune biz desk in 1990.)
Local newspapers tend to be civic boosters — they write about how great business is doing, though the editors at the Tampa Tribune pushed for good reporting. When I got to the Journal in 1995, the paper clearly demanded tougher stories. Then something odd happened. Around the time of the dotcom bubble, say 1997 through 2000, the emphasis became less on tough investigative stories, and breaking news, and more about trying to capture the mood of the bull market and the vast cultural/life style changes the bull market was creatingâ€”ie how it was making middle class people rich overnight.
Some editors were emphasizing so-called news-you-can-use, i.e, stories about how people can turn 10 cents into $1. It was classic bull market reporting. The absurdity of this approach became clear when the bubble burst in 2000 and our readers began screaming bloody murder and demanding more news about how Wall Street screwed up.
6. What are some of the issues in covering Wall Street for business reporters?Â
Most people speak to you for a reason — short sellers give you information to drive down stock; traders who are long tell you positive stuff because they own shares of a company youâ€™re writing about. Thereâ€™s nothing wrong with having people with a vested interest giving you information as your source, as long as you understand where they are coming from and you investigate if what theyâ€™re saying is valid.Â
7. Do you think some business journalists get used by investors — either short or long? If yes, how so?Â
Sometimes they do, but so what? As long as the journalist is fair, and by that I mean that the reporter just doesnâ€™t blindly run with information from one side or the other, it doesnâ€™t matter where the information comes from. When I covered the Ambac bailout, I was attacked by both sidesâ€”the longs and the shortsâ€”depending on what I was reporting. Traders began blogging all sorts of nonsense about me and my motives, when all I was doing was covering the issue like a baseball game: When the deal was progressing I said so. But when it was falling apart, I reported that as well.
On the other hand, I know some reporters who speak almost exclusively to short sellers and write negative stories about companies. I have no problem with that, either as long as the reporting is sound. Barring outright lies and fraud, in the end, itâ€™s just information that the markets needs to digest.
8. What’s the best type of source on Wall Street — a buy-sider or a sell-sider — when reporting about a company?Â
I think its best to have sources on both sides. Early in my career, I had an editor who thought all institutional investors — i.e., companies like Fidelity — weâ€™re on the side of the angels. They were doing Godâ€™s work by making money for small investors, ect. It didnâ€™t take me long to realize that the buy-side may be helping middle America save for retirement, but these players are as conflicted as some of the big Wall Street firms.
Remember the Wall Street research scandal and the conflict of interests involving Wall Street analysts pumping up stocks of investment banking clients? Some of the biggest customers of those analysts were large buy-side investors who wanted the analysts to keep promoting stocks that were in their portfolios. In other words, everyone is full of crap to a certain extent on Wall Street.
9. Did your reporting change in going from the WSJ to Newsweek to CNBC?
The big change was going from WSJ to Newsweek, which was much more selective in the types of Wall Street stories it ran for the magazine. CNBC basically wants me to do what I did at WSJ, particularly after the stock-market bubble broke — break a lot of news about people and companies and go on the air with it.Â
10. What’s the hardest format to report about business news and why?Â
Most print reporters think TV reporters are idiots. But thatâ€™s usually before they go on TV for the first time and totally freeze up (as I have done more than once). I would say both TV and print reporting is challenging in different ways. Print reporters also must be good writers, but the format allows you to provide more detail and nuance. Time constraints force TV reporters to gloss over details on the tube. But the best TV reporters I know understand that to tell stories quickly and authoritatively you often have to do more reporting than you would in print, where you can hedge conclusions easier. Good TV reporters try to nail down facts so they can be more sweeping in the way they describe things and more definitive in what they report, and that requires much more reporting.Â
11. You’re dealing a lot with anonymous sources feeding you info about potential deals. How do you know to trust them?Â
My best sources are anonymous sources who Iâ€™ve been dealing with for years. The bottom line: I donâ€™t trust them. I try to verify everything. Not because people are looking to plant false information. Actually itâ€™s been my experience that most people on Wall Street donâ€™t do that; they may have a bias or an opinion that colors what they say, but the vast majority of the people I know on Wall Street or even in government donâ€™t lie. The problem is that even your best sources have a bias and they get things wrong, and thatâ€™s why even the best reporters make errors. But the best reporters also try not to make errors, and make a hell of a lot less of them because they donâ€™t fully trust their sources. They check, re-check, call up other sources and then talk to their editors about their sourcing. Â
12. Is there too much rumor and speculation reporting with the stock market?Â
Not really. Rumors often move the markets and I donâ€™t have any problem reporting on rumors if, of course, they have a market impact, and as long as the rumor is clearly stated as such. Rumors, after all, were the main reason why Bear Stearns imploded. I know this is 20-20 hindsight, but looking back, it would have been insane to just ignore all those rumors that Bear was facing a liquidity crisis.
The bigger issue is how best to report rumors and thatâ€™s where things get tricky. My rule of thumb is to separate fact from fictionâ€”clearly state what is rumor and what isnâ€™tâ€”and then get both sides of the story.
Case in point: On the Tuesday before Bear Stearns imploded, we spent much of the afternoon discussing the companyâ€™s falling share price and rumors that the company was facing balance sheet issues. I then went on the air with a statement from the firmâ€™s CFO Sam Molinaro who said the rumors of illiquidity were false. But in the same report I also pointed out that these rumors could have a real impact on Bear that could result in a run on the bank, which did in fact happen. I think our viewers benefited from that story; it tried to explain how rumors on the street were crushing Bearâ€™s stock. I showed that top officials at the company were so concerned about all the speculation that they were now going public with their side of the story, and I pointed out that the rumors, whether true or false, could lead to a run on the bank, much like the classic bank runs of the Great Depression. Â
13. Jim Cramer — love him or hate him?Â
Love him. Full disclosure: I owe Jim a lot. He and Larry Kudlow gave me my start in TV journalism while I was at the Wall Street Journal by putting me on their old show, Kudlow and Cramer. Jim really is a great guy and one of the smartest people I know on Wall Street.