Fox Business Channel Market Top ?

Fox_market_top_2
Last year, Dan Gross looked at what he called the rather inauspicious timing of the Fox Business Channel (FBC) launch.

Since we here at the Big Picture love contrary indicators — the weirder, the better — we paid a special notice to that column. It was diaried away to be followed up at a later date.

Well, its now a full quarter later, and guess what? The Fox Business Channel debuted on October 15, 2007. With its first quarter officially behind it, how has the market performed? 

On the last trading day before FBC debuted, the Dow closed at 14,093. Yesterday’s Dow close was 12,159.21 — 60 points shy of a 2,000 point whackage. (I don’t want to think what that is annualized!)

The psychology of this is pretty straight forward. In the depths of market lows, the despair is so thick  that many people lose the ability to make rational risk/reward analyses. Consider what we wrote back in 2003 as signs of a market bottom:

Financial Media Closings:  Financial television viewership and finance magazine subscriptions are a direct reflection of the general population’s interest in equities. At market tops, TV ratings soar, and Publishers sell lots and lots of magazines. Bottoms occur when the public is disgusted with stocks: They certainly don’t want to hear about them on TV or read about them during their leisure hours.

By May 15th, 2003, several high profile financial magazines had closed: Mutual Funds Magazine, Bloomberg Personal Finance, Worth magazine; Also shutting down was Web FN, a streaming financial news webcaster. As magazines were closing, financial television ratings were fading. Once upon a time, you could walk into any bar or restaurant to find CNBC playing on the television over the bar. Stocks had become the newest sports franchise, with fans rooting for their “teams.”

Since those halcyon days, CNBC’s viewership has slid dramatically; The N.Y. Post reported that financial channel CNNfn (a CNBC competitor) was on the verge of closing down. The station (CNNfn) ended up revamping their format, away from pure stock coverage, and towards the more broadly defined “personal finance.”

During a Bull run, the opposite occurs: People become emboldened to take chances, swing for the fences. They lose all risk aversion. Launch a 3rd (or 4th) business news channel? Why not! Its a bull market!

Examples abound. As Dan correctly observed, TV shows like The
$treet
and Bull debuted in 2000, and real estate show Hot
Properties
in the fall of 2005.

What this tells us is at extremes of good and bad, leaning against your instinct is the desired thing to do . . .

 

Source:
Did Roger Ailes Call the Market Top?
The strange timing of the Fox Business Channel launch.
By Daniel Gross
Posted Monday, Oct. 22, 2007, at 3:19 PM ET
http://www.slate.com/id/2176408/

Contrary Indicators: 2000 – 2003 Bear Market 
Barry L. Ritholtz,
Maxim Group, August 2003
http://bigpicture.typepad.com/comments/2003/09/contrary_indica.html

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What's been said:

Discussions found on the web:
  1. Dan commented on Jan 18

    If Fox is responsible for the 2000 lost Dow points, its 6,500 viewers must be pretty powerful.

  2. MB commented on Jan 18

    If this keeps up, by October the Dow will be another 6,000 points lower.

  3. DealBreaker.com commented on Jan 18

    Opening Bell: 1.18.08

    MBIA, Ambac Bond Default Risk Exceeds 70%, Swaps Show (Bloomberg) Maybe, just maybe the ratings agencies are going to have to lower their numbers on MBIA and Ambac. It’s just a possibility. While they’re humming and hawing on this…

  4. cinefoz commented on Jan 18

    The channel was created because some Fox airhead believed that the world needed a red meat Republican business channel. They conflated business and actual dollars with fantasy politics, fantasy news, and viewers who live in social conservative fantasy worlds.

    The Fox News demographic is probably intellectual trailer trash who wants to feel superior to others by calling them liberals and other names. This does not easily translate into a vast ocean of wealth. Thus, business news for trailer trash is a weak concept for a news channel.

    It’s also fun to laugh at them for being so incompetent. Ha Ha, you doofusses. Jerks.

  5. cinefoz commented on Jan 18

    Perhaps Fox Business News could get Britney Spears to do a few ads for them. She fits their demographic quite well.

  6. Lurker commented on Jan 18

    Keep bashing Fox, just like you and your posters did about their poor and dumb demographics that was well below CNN lol.

    Nice ad man source lol

    http://www.mediabistro.com/tvnewser/cnbc/where_the_wealthy_watch_72319.asp

    To put Fox Biz in context, check out these ratings for FNC one year in

    (The first number is the July 97 monthy number. The second number is the July 05 monthly number. The number in parentheses it the percentage change from 97 to 05)

    Total Day P2+

    FOX 15,000986,000 (+6473%)
    CNN 408,000435,000 (+7%)
    MSNBC 48,000200,000 (+317%)
    CNBC 171,000131,000 (-23%)
    HLN 204,000240,000 (+18%)

    Prime Time

    FOX 24,0001,913,000 (+7871%)
    CNN 869,000713,000 (-18%)
    MSNBC 67,000280,000 (+318%)
    CNBC 290,000115,000 (-60%)
    HLN 254,000413,000 (+63%)

    Liz and Dave are already averaging 15,000 and Dave Ramsay at 27,000 and that’s not including all the new places FBN has popped up

    http://www.multichannel.com/article/CA6517365.html

    Check Fox Biz ratings in a year or two. Did your crush Liz not invite you on FBN that’s why you’re so bitter? lol

    Well you definitely won’t be going on anytime soon…

  7. Florida commented on Jan 18

    I remember going to visit my parents for a weekend a couple of years ago. After dinner, my mom had some tv show she wanted to watch and I sat down to watch it with her. It wasn’t one I was familiar with, so I asked her what it was about. Turns out, it was “Flip This House.” I watched one episode with her and remember thinking, “Yep, that’s the top of the housing market.”

  8. Barry Ritholtz commented on Jan 18

    Yo Lurker,

    1. This was a post about contrary indicators, not an anti-XXXX rant. I mention the awful timing of Worth Magazine and CNN fn also.

    Too many of you politcos think (if that’s the correct word) with your lizard brains. (that includes you too, cinefoz)

    2. This post is on Fox Business Channel, not Fox News. But you are correct — we should diary this for 6 months and a year — like I did with the Dan Gross piece — and see how FBC is doing . . .

    3. Yes, Liz has invited me on.

  9. dblwyo commented on Jan 18

    OT – has anybody spent any time with FBC ? Must confess I haven’t and would be interested in feedback and assessments. My viewing is largely online and the view Fox clips didn’t strike me as interesting.

    I would however be interested in having Brit on as long as she didn’t talk ;).

    That’s a joke, Barry. :)

  10. Loren Steffy commented on Jan 18

    BizLinks | 1.18.07

    Tax rebates of up to $800 being considered to boost economy Schlumberger reports 22 percent profit hike — the energy industry’s earnings season officially begins. We’re All Keynesians Now — Bernanke and that 70s show. Agency to investigate employee’…

  11. Brian commented on Jan 18

    The Second Avenue subway is also a reliable contrary indicator. Proposals and efforts to get it built have coincided with major market tops since the 20s and 70s. This is the 3rd time a shovel has been put in the ground on the project.

    http://en.wikipedia.org/wiki/Second_Avenue_Subway

    “In 1929, the Board of Transportation of the City of New York tentatively approved the expansion, which included a Second Avenue Line…Due to the Great Depression, the soaring costs of the expansion became unmanageable. Construction on the first phase of the IND was already behind schedule, and the city and state were no longer able to provide funding”

    “The Second Avenue project was given top priority…and a groundbreaking ceremony was held on October 27, 1972. However, the city soon experienced its most dire fiscal crisis yet. Construction of the subway was halted, with only three sections of tunnel having been completed.”

    The current first phase of the project is scheduled to be completed in 2013. Anyone want to lay any bets on whether this effort survives the coming fiscal problems for the City as Wall Street downsizes?

  12. Brian commented on Jan 18

    The Second Avenue subway is also a reliable contrary indicator. Proposals and efforts to get it built have coincided with major market tops since the 20s and 70s. This is the 3rd time a shovel has been put in the ground on the project.

    http://en.wikipedia.org/wiki/Second_Avenue_Subway

    “In 1929, the Board of Transportation of the City of New York tentatively approved the expansion, which included a Second Avenue Line…Due to the Great Depression, the soaring costs of the expansion became unmanageable. Construction on the first phase of the IND was already behind schedule, and the city and state were no longer able to provide funding”

    “The Second Avenue project was given top priority…and a groundbreaking ceremony was held on October 27, 1972. However, the city soon experienced its most dire fiscal crisis yet. Construction of the subway was halted, with only three sections of tunnel having been completed.”

    The current first phase of the project is scheduled to be completed in 2013. Anyone want to lay any bets on whether this effort survives the coming fiscal problems for the City as Wall Street downsizes?

  13. cinefoz commented on Jan 18

    Financial markets, booms, busts, rallies, bailouts, and all manner of extreme activities could not exist without the lizard brain. Being able to stay a few steps ahead of what the collective mass lizard brain will do next is a valuable tool.

    I’m not kidding or being sarcastic when I write this.

    You can’t write about financial activities without understanding the motivations of others. Nor can someone plan rational stock market moves without taking the lizard brains of everyone into consideration.

    Sorry about not being able to differentiate FBN from FNN. Dish doesn’t carry it so I have no frame of reference. To me, at this time, they are the same. Additionally, part of the FNN business model is red meat reactionary politics, so it would seem to be fair game to discuss them in that context. If FBN does not follow this philosophy, it will become apparent when or if they become available.

  14. Costa commented on Jan 18

    Brain,
    I acutally mention that 2nd ave subway indicator a while ago.

  15. Screwed Saver commented on Jan 18

    Yeah, and what about Fast Money? It was lauded the other day on TBP, but I happen to see it as another brick in the wall.

    I have watched FBN and don’t like it at all. Too much hyper-hucksterism…like CNBC on ‘roids. Oh,and they’ve poached so many anchors from Bloomberg and CNBC—why couldn’t they leave my little Sandra Smith on Bloomie.

  16. CaptiousNut commented on Jan 18

    I just don’t know that 2007 was a good year to start ANY new television channel – nor do I think anyone starting a newspaper today would have much in the way of prospects.

    Thank you DVR. Thank you Internet.

    That Second Avenue subway signal is interesting. Anyone know when they are going to break ground on the Brooklyn waterfront park? They have been hyping that one for a while too.

  17. A Hodge commented on Jan 18

    why is it a contrary indicator? It may be FBN was partly created to blame all bad financial news on the Ds, just like Kudlow. i will believe it was a business decision if they shut it down consistent with their ratings

  18. mhm commented on Jan 18

    “FBN … poached so many anchors … why couldn’t they leave my little Sandra Smith on Bloomie.”

    Ah, so that’s what happened…

  19. toady commented on Jan 18

    This post ties in with the comments on your Cramer post just below this one. Financial infotainment products are bull market cheerleaders to keep the viewer/consumer and therefore revenue.

  20. Pat Gorup commented on Jan 18

    Ever watch that FOX Business Channel block of two hours on Saturdays? It’s hilarious!!

  21. Peter Davis commented on Jan 18

    I was thinking a similar thought the other day when I saw the new E-Trade commercials. These commercials are all about how cool it is to trade, making it seem like a game. Of course, it is a game, but a serious one in which all of the folks in the E-Trade spots will soon be broke. You see, fellas, it’s pretty easy to lose it, too.

    The whole thing looked to me like another sign of complacency and overconfidence.

  22. Eric Davis commented on Jan 18

    I thought that announcement of “WallStreet 2” was a sure sign of the end of the bull.

  23. Joe commented on Jan 18

    Actually I don’t mind flipping on FBC for a business fix at odd times when CNBC is cramming more “Deal or No Deal” or paid programming down our throat. FBC is just ok, some good some bad, but better than nothing.

  24. andy in nz commented on Jan 18

    the biggest contrary indicator to me was Blackstone listing, private equity goes public ? didn’t make sense then and now.

    as shaggy would say: zoiks scoob, lets get outa here!

  25. PTodd commented on Jan 18

    In 1929 they did not have TV or business channels. But it could be that the coming depression will be good for ratings on business channels. Lots of discussion on a new currency, gold standard, banking regulation, government bail outs, investment bankers jumping from high rises, etc.

    What did Fox, Goldman Sachs and Paulson & Co. know and when and how did they know it?
    Sir Bubbles Greenspan is now an advisor for Paulson & Co (payback time?).

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