Jumping the Gun
It looks like someone's written a story before it actually happened. This article (courtesy of Drudge) by Michael J. Martinez trumpets the final trading day losses of the Dow Jones Industrial Index (DJIA).
Here's the lead: "Wall Street started its last trading day of 2005 Friday with stocks sliding as investors gave up on the dwindling fourth-quarter rally and consolidated what profits they made this year. With little news to spur buying, the Dow Jones industrial average threatened to close the year with a loss for the first time since though other major indexes were expected to post modest gains for 2005."
Doom and gloom or simply stating the facts?
In the story, Martinez writes, "In the first hour of trading, the Dow fell 37.86, or 0.35 percent, to 10,746.96. The Dow would need to close above 10,783.01 for a positive 2005."
But look at the time the story was posted. The time stamp is 9:39AM Eastern Time. The market opens at 9:30 AM Eastern Time. In just 9 minutes of trading, Martinez assessed the situation, wrote 482 words (hastily I might add, as the lead itself is missing a date in the last sentence between "since" and "though"), submitted it for review by an editor (or maybe not considering the previously identified error), and posted it to the website. Now that is efficiency. I don't think I'll finish this blog post in 9 minutes.
I know that there are futures and that most of it was probably written prior to the open of the market and that he just waited to see if it panned out, but doesn't that seem like making a judgement on the news before it happens?
Doesn't it seem like we should wait for the close to assess the year in total? Most likely, the Dow will close with a slight loss for the year (as I write this, it is trading lower) if you measure it from the close of 2004, which was 10,783.01 and seems to be what Martinez used. However, if you use the open of 2005, the Dow would end the year lower than it started if it reaches below 10,729.43. It depends on where you start measuring, which is really pretty subjective, isn't it?
Of course, anyone with any financial knowledge will also point out that the DJIA, while widely watched and reported, is an index of only 30 stocks.
The S&P 500 ended 2004 at 1211.92 and looks like it will end 2005 above 1250. The Wilshire 5000, which provides one of the most complete looks as the total market, looks like it ended 2004 at 11,968.10 and will end 2005 around 12,600.
The bottom line: Stocks were up in 2005, even if the DJIA ends today with a loss.
What's the point? With an extra half hour of research and the help of Yahoo Finance, I believe I pointed out an incident of creating news rather than reporting it and wrote a more valid assessment of the markets performance in 2005 than Martinez. It was slightly less timely, but only by about 40 minutes.