Make sure you read beyond the headline

By DAVID MOON, Moon Capital Management, LLC
October 18, 2009

The September retail sales figures were released last week. A Wall Street Journal article about the data carried this headline: “Retailers’ Same-Store Sales Top Estimates.”

A New York Times article ran under this headline: “Retailers’ Sales for September Only Reach 2005 Levels.”

Your perception about the information depended on the source of your data and the depth of your reading.

Was something sinister at work? Wall Street Journal readers are generally investors. They look for good news. More people watch CNBC, talk about their 401(k)s and read the Wall Street Journal when the stock market is going up. The Journal has a structural incentive to look for the positive aspects of non-controversial stories.

The New York Times Company is losing money and has eliminated its dividend. It may simply be looking to highlight any industry doing as badly as it is.

There are several lessons offered by the tale of the conflicting headlines.

Don’t just read the headlines of a news story. The folks who write the news stories and editorial columns don’t write the headlines. You would actually be better served if you could avoid reading headlines. Too often, headlines and the actual stories don’t have much to do with each other.

Based on my experience reading a stack of national and world newspapers each day, I think the headlines are sometimes written by people who not only didn’t write the story – they didn’t read it.

Don’t believe everything you read in the paper. This doesn’t hold true just for editorial content. Just because something is factual doesn’t make it The Truth. Compared to a year ago, retail sales declined in September. That is factual. To know The Truth, however, requires that you be able to put that single piece of information into context, combining it with other pieces of information into a mosaic that also includes some of your own logic and reasoning.

Draw your own conclusions. If you are going to simply read a newspaper to decide whether or not the economy is improving, global warming is a threat to mankind or if Tennessee’s football win over Georgia says more about the Vols or Bulldogs, you better get your information from multiple sources.

If you read a single source, you will be subject to the bias – likely unintentional – of that sole source. Even pieces that aren’t supposed to be opinionated - like the New York Times and Wall Street Journal September retailing articles –will often include bias.

If you only watched Fox News or listened to NPR, your view of the world would likely be different than if you got your news from several sources.

None of my comments are intended as an intentional plea for you to buy and read more newspapers, although many in this industry would love for you to do that. I do wish more people were well-read, however. Don’t be lazy. Don’t accept things at face value. Don’t skim over headlines and then consider yourself well-informed. Draw your own conclusions.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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