Don't automatically make comparisons

TheStreet.com media critic Marek Fuchs writes Friday that business journalists should avoid making automatic comparisons between companies in the same industry in stories because it leads too often to the sort of sloppy reporting that misleads investors.

Fuchs noted the problems inherent in making such a comparison by comparing a lead in the Financial Times to a lead in the Wall Street Journa.

He wrote, “The [Financial Times][ lead linked Morgan Stanley and Lehman Brothers: ‘Morgan Stanley reported a 7 per cent fall in third-quarter profits yesterday after unexpectedly taking a relatively bigger hit from credit market turmoil than rival Lehman Brothers.’

“The lasting lesson for you investors? The item you should take away from the discrepancy? Morgan did not hedge its leveraged loans, we are told, while ‘in contrast’ Lehman ‘partly’ did.

“You want the real scoop? I don’t even have to give it to you myself today. All we have to do is head over to the Breakingviews column in The Wall Street Journal. It also starts with a lead that contains both Morgan Stanley and Lehman Brothers. What, you ask? How can this be? I thought, wise and mighty Business Press Maven, you said the comparison was false. Easy — here’s the lead, which pointedly rejects the appropriateness of the good/bad, dark/light, day/night story line:

On the face of it, Morgan Stanley appears to be suffering more indigestion from its voracious appetite for financing leveraged buyouts than Lehman Brothers. The larger Wall Street firm’s third-quarter earnings came in 11% under estimates, while its rival actually beat expectations.

What’s more, Morgan Stanley took a larger hit from writing down loans and securities. But these numbers are misleading.”

Read more here.