Wall Street vs Blogs, Analyst Edition

Bernstein Research media analyst Michael Nathanson is worried about "a

new paradigm in how financial markets get information and how that information

impacts our markets". He’s been putting out all this research about NewsCorp

and MySpace, you see – but his clients don’t trust only him any more!

Instead, they get information from other places too, including blogs.

Here’s Nathanson’s conclusion in his "weekend

blast", headlined "Is MySpace Getting Swift Boated?":

Whether these reports about MySpace are true or not, we will have to wait

and see. Similar types of "reports" last week about Yahoo! ultimately

proved to be erroneous after its quarterly results came out. This is the new

world. It makes our job as equity analysts and investors more difficult and

will likely drive increased stock volatility, particularly in the very short-term.

It will also make the truth more valuable than ever.

Nathanson’s piece is profoundly silly, especiallly when compared to the measured


response from the object of his ire, Peter Kafka. Kafka points out that

for all Nathanson’s overheated rhetoric, he doesn’t actually take issue with

the substance of anything that Kafka reported. Nathanson doesn’t seem to understand

what the problem with the Swift Boat Veterans was, back in 2004. The problem

was that they were telling lies; the problem was not that people were

paying attention to non-MSM sources of information.

I know nothing about Michael Nathanson, but I do know that sell-side analysts,

for all that they get to ask questions on earnings calls and have the CFO’s

direct line, have never been a particularly fruitful source of news and information

about companies. (Indeed, Reg FD more or less ensures that they can’t

be.) So Nathanson has nothing to offer but his analytical prowess, while blogs

such as Silicon Alley Insider can actually break relevant news. If Nathanson

is right and what investors really want is "the truth", then they’ll

probably be better off with blogs than they will be with his research.

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