I was pointed here by the Economist, but sadly the particular article that started my snowball is behind Premium Content walls; you can find the stub here.
At least I can take you to the pdf of the Paul Tetlock research that the article quotes.
My summary: Most of the time, journalists report on what the market did. Sometimes it’s the other way around, and markets do what the journalists suggest. Suggest through the use of powerful words. Words that evoke emotion. And more unusually, such market responses tend to be short-lived, clawing back losses (or giving away gains) within a short period of the original article’s appearance.
Interesting. Lakoff and anchoring and framing meets Surowiecki and Wisdom of Crowds? I wonder what would happen if Paul Tetlock ran the same study on blogs, on journalism that is characterised by voice and passion.
I’m with Taleb on this one: here he is explaining how journalists fit post hoc explanations….
http://www.smartmoney.com/theproshop/index.cfm?story=20051110&pgnum=2
IMHO, most journos are lazy and wilfully ignorant. I live among them in North London, and I’m constantly shocked by their lack of curiosity, and readiness to peddle their own unexamined prejudices.
Recently, the Evening Standard city editor irritated me…
http://etrading.wordpress.com/2006/05/30/hello-world/
IMVHO most financial media with objectivity as a goal (WSJ, Reuters, etc.) tend to get most of the story explaining the outliers correct, although their lapses do create interesting market opportunities where Tetlock’s observation about reversion to fundamentals is more pronounced.
One should distinguish between the objective media and the entertainment segment (e.g. Mad Money) which is clearly trying to generate a market impact (and doing quite well in that regard).