DOES ANYONE HAVE A CLUE?

By JOHN ROTHCHILD

LIKE MANY NERVOUS INVESTORS, I'VE BEEN WONDERING whether to bail out of stocks at these levels. So I've been reading the papers more carefully to find out what's really going on. In fact, I've been reading several papers at once. As a result, I'm now convinced that newspapers are no help at all for figuring where stocks are headed tomorrow. They can't even tell us why stocks went up or down yesterday. The New York Times gives an entirely different explanation than the Wall Street Journal, which gives an entirely different explanation from, say, USA Today.

For example, stories on June 27 reported that the Dow was off 34.59 points. The Journal led off its analysis with the following: "Hopes are fading that the Fed will cut short-term rates." The Times chose to focus on the slump in technology issues and the fact that Disney's Pocahontas was not raking in the expected revenues. Then on June 28, USA Today had stocks falling on "trade-war fears," but in the Times, they fell as "market players reacted to conflicting reports on the economy and worried about the direction of interest rates."

You have to feel sorry for the reporters who write these stories day in and day out. They get bored with words like up, down, gain and loss. In only a month's worth of papers, the Dow has galloped and soared; technology stocks have slumped, rallied and lifted; stocks in general have hobbled, languished, dipped, rebounded, treaded water, plummeted, jumped, slipped, surged, barreled, broken through milestones, defied gravity, come down to earth, shrugged off surprises, limped through fitful sessions, taken breathers, run out of gas and staged a wildly mixed performance. (What I wouldn't give to see a wildly mixed performance live!).

They can't just say that the market opened yesterday and a certain number of stocks changed hands. They can't write that "stocks went up for a million different reasons," because that would never sell a copy. They have to make it sound like the Olympic Games, the N.B.A. finals, a psychiatry session, a Broadway play and the Indianapolis 500 rolled into one. They have to tell us what the experts think the market is thinking, and even what the market thinks the market is thinking. I did a study of this back in April, but it could have been any month.

April 18 (Dow down 12.80): The Times said stocks were brought down by a surge in oil prices following Iraq's refusal to comply with U.N. sanctions. The Journal said they finished lower because "a sell-off in the bond market eroded investors' enthusiasm for first-quarter earnings reports"--an explanation that left this investor totally confused.

April 20 (Dow up 28.36): The Times noted the surge in blue chips, "bolstered by a recovery in the dollar," while the Journal focused on stocks in general, which closed lower in the "wildly mixed performance" described above. The Journal noted two causes: skittishness about inflation, and fickle investors who reacted negatively to positive earnings reports. The dollar didn't come into it.

April 21 (Dow up 23.17): The Times claimed that stocks were pushed higher by "six rounds of computer-guided buy orders." The Journal said corporate earnings pushed stocks higher, along with the "belated recognition of the strong global position of ... U.S. multinationals." In the Los Angeles Times, it was healthy corporate earnings plus the rebounding dollar that did the trick.

Reporters have a Rolodex of sources, which includes Wall Street traders, market players and analysts who can be counted on to say something. This comes out as "analysts contend" or "traders believe" that the dollar's rise has made the market fall, or the dollar's fall has made the market rise. And if the dollar didn't rise or fall the way analysts thought it would, then the market has "belied expectations.''

When they can't get an analyst, trader or market player to explain the ups and downs, and the janitor at the stock exchange is also busy, they have two choices. The first is to bring Wall Street into it, otherwise known as the market, as in "Wall Street has not been particularly worried about the dollar's slide" (the Times, April 8), or "the market was succumbing to the correction that some economists had been anticipating" (the Journal, April 12). Wall Street and the market are constantly fretting, shrugging off bad news, cheering good news and even looking forward to vacations, as it did a couple of months ago, when it set "records in anticipation of a three-day holiday."

The second choice reporters have is to pull out one of the numerous generic explanations of why stocks went up or down, as in "blue chips fell as investors took profits," or "investors were looking for issues that have lagged and therefore are cheap," or "investors are concerned their stocks are poised to fall after rising too far."

Lately, we've been reading that the market is worried about a correction. There may be good reason to worry, but what the market thinks is not one of them. My advice to people who might be seriously inclined to sell stocks because of what they glean from the paper? Subscribe to a second paper. That way you'll get a second opinion, even about what happened yesterday.