Friday, February 04, 2011

Odds & Ends From CNBC

I saw a couple of inane segments recently on CNBC that I felt merited comment.

This morning, former Fed member Randy Krozner appeared on the morning program to do damage control in the wake of Helicopter Ben's recent public remarks at a press club.

Unbelievably, Krozner denied that there's any inflation coming down the road in the US economy! No chance. None. Totally unfounded fears. This seems curiously at odds with a recent Wall Street Journal article (post about it here) and the comments of a guest on CNBC just this week.

Energy, in the form of oil prices, and food both seem empirically to be heading sharply upward. So why can't Krozner see that?

Oh, wait. The government uses an inflation measure that strips and energy!

Perfect. Our central bank has blinders on when it comes to inflation.

Then Krozner waved off concerns that any inflation would require rate increases that could choke off employment gains. Again, hardly reassuring or based in reality.

The other segment which left me somewhat incredulous earlier this week as yet another discussion between co-anchors spotlighting, ex post, one or two companies which have had huge total returns for the last 12 or 18 months. This seems to be a favorite CNBC pastime. Find a company with a single period of incredible market outperformance, preferably in triple digits, then laud it as an investment, and ask the perennial question,

'So, is it still a good investment, or is it too late to get in, and time to unload?'

My own proprietary equity research found that there are a fairly large number of such short-term outperforming companies. The problem is that few of them become long term outperformers. So investors are forced to time their exits. Never an easy task.

In effect, CNBC's continuing focus on recent one-hit wonders seems to me to be the epitome of irresponsible reporting on financial investing. I pity anyone who takes any investment advice from the network seriously.

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