Categories: OLD Media Moves

Tech stocks rise due to weak financial journalism

Tech stocks have returned to bubble levels, thanks to PR, weak financial journalism and cheap credit, writes noted financial journalist David Cay Johnston.

Johnston writes, “These sky-high valuations get little skeptical coverage in the financial press, which has acted more as lapdog than watchdog in the past decade. Instead of barking warnings, many Wall Street reporters wag their tales in ways that please the speculative crowd, which, at great profit, feeds them market-moving tidbits along with a pat on the head.

“A key element in today’s irrational exuberance is the rise of novel ways of valuing companies that gloss over key facts.

“In the 1990s the stock bubble expanded as companies persuaded journalists to shift focus from traditional measures such as net profits and net earnings per share. A new standard — earnings before extraordinary items — became a common measure, even though some companies reported extraordinary items with almost the regularity of quarter financial reports.”

Read more here.

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Chris Roush

Chris Roush was the dean of the School of Communications at Quinnipiac University in Hamden, Connecticut. He was previously Walter E. Hussman Sr. Distinguished Professor in business journalism at UNC-Chapel Hill. He is a former business journalist for Bloomberg News, Businessweek, The Atlanta Journal-Constitution, The Tampa Tribune and the Sarasota Herald-Tribune. He is the author of the leading business reporting textbook "Show me the Money: Writing Business and Economics Stories for Mass Communication" and "Thinking Things Over," a biography of former Wall Street Journal editor Vermont Royster.

View Comments

  • To be clear -- PR here means both public relation and the absurd "price/revenue" ratio showing up in news stories about companied with little or no profits.

  • Assessing corporate valuations is the weakest spot in most business newsroom. Still dependent on analysts, sell-side.

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