Biased or skin in the game?
In financial journalism, there’s this tradition for the journalists to disclose whether he/she is personally long or short the stocks mentioned in the articles. The idea is to let the readers know whether his/her views on these stocks could be biased due to personal interest involved.
It is also claimed that readers want unbiased, neutral journalism. Many financial journalists tend to take that to heart and decide against owning any financial assets that they might be writing about.
The problem is, of course, without owning these financial assets that they’re writing about, there’s also a lack of skin in the game. They could be writing anything about a stock, a company, a fund, a startup or a certain crypto currency, all without directly risking their own capital and personal wealth.
In the intrinsically unpredictable and volatile financial world, this basically relieves these “neutral” journalists of accountability. They could literally write anything they want about a stock, a company, a fund, a startup or a certain crypto currency. If what they write turns out to be true (even if it’s only for a brief period), they claim prescience and (moral) victory. If what they write turns out to be not true, or simply does not happen, then it’s merely the random nature of finance.
In this case, very often you see the journalistic writings become entertainment, rather that a proper reportage that people imagine they are.
I prefer the journalists to have a skin in the game.
If they’re writing about a stock, I prefer that they either own the stock or the options longing or shorting the stocks. With their personal money in the game, they’d be more alerted to details of what they’re writing about, instead of just treating it as an article that will expire within 24 hours. I’ll also know clearly when they say positive things about a stock while they’re shorting it, what could be potentially the motivation behind the apparent contradiction to personal interest. If they are not personally long or short the stock, I have no way to judge if that positive things are worth looking further into.
Same thing with journalists writing about startups. If they themselves are angel investors and have their own capital exposed to the extreme high volatility of this world, I would read more earnestly what they write about founders and companies. If they have fundamentally no skin in the game other than the risk of losing the chance to be invited to post-TC-Disrupt private parties, I have be very careful about reading too much into what they write about.
With crypto currency it’s even easier, given the constantly updated pricing and the violent ups and downs. For a journalist to predict that bitcoin might be worth $0 in 5 years, I’ll be more willing to read into whatever lengthy analysis he/she provides if he/she personally owns a meaningful amount of BTC, or for that matter the rivaling ETH.
If they do not personally long or short BTC or ETH, and they wrote a 10,000 words of “why bitcoin can hit $100,000 in 202x years” just because they interviewed some hotshot crypto expert, I would swipe left the article immediately.
In financial journalism, beware of those that are attached to none and claim neutrality. Their opinions are usually much more uselessly biased than those that have a skin in the game.
