It’s easy to poke fun at just about any profession. As a lawyer, I’ve certainly had to put up with my fair share of tasteless jokes aimed at my livelihood. As a blogger, my approbation is usually turned towards members of the press who periodically say ridiculous things or get their facts wrong.
Moreover, if there is one subset of the media worthy of a large volume of rhetorical slings and arrows, it has to be the financial press, specifically those who cover securities markets. I’ve had my fun over the years pointing out contradictory descriptions of market activity that are published on the same day, absurd “explanations” of why a market moved in a particular direction, which are often made with absolutely no basis in fact, and the mind-numbing, day-to-day relation of technical minutiae dressed up and packaged in a pathetic attempt to give the story more “zazz.”
One of the more common incarnations of the stock market feature article is the list of companies that you haven’t heard of, companies that are diamonds in the rough, companies that are poised to “break out” and achieve their true place in the portfolios of really smart people. Message: best to buy now before those prices reflect reality. This caters to everyone’s desire (not just our friends in Guangdong/HK) to be an insider, looking smart and making piles of cash.
These lists are created by a variety of techniques, including tried and true valuation analyses in addition to other more ‘creative’ methods including payola, random chance and my personal favorite, the monkey and a dartboard. And you can’t argue with the monkey’s results; he consistently outperforms the S&P 500 year after year.
A recent case of dubious list compilation generated a lot of chatter on Twitter yesterday amongst the usual tweetering China twits. I hope I got my terminology correct there. You kids and your funny new words.
Anyway, the object of discussion was a list of 19 Chinese brands that were poised for greatness. The list was prepared by a couple of CFAs that write for The Business Insider; the article was written in the “The Money Game” section, the name of which makes me want to hurl. The problem begins and ends, really, with this misleading and highly problematic headline:
The 19 Must-Know Chinese Consumer Companies That Are Taking Over the World And Growing Like Crazy
Let’s take that apart a bit. First, “growing like crazy” is red meat to the stock picker crowd of course, designed to initiate salivation and wire transfers. The authors were smart enough not to also insert the word “cheap” into the headline; coupled with a suggestion of high growth, an additional suggestion that these stocks are at rock-bottom prices may have led numerous folks on “The Street” to experience spontaneous orgasm.
But I digress. The second interesting bit there is “must-know,” which is curious. Who must know? Why must they know? What will happen if they don’t know? The answers are obvious, if rather stupid: a) purchasers of stock, b) because they can’t afford to miss an opportunity like this, and c) because if they don’t, they will be branded as losers and die penniless (i.e. five-figure income).
So far, all of this describes your garden variety empty financial press type article. But wait, there’s more. Third, “taking over the world.” This is the language that jumped out at me and, I suspect, my fellow China pundits. What can this possibly mean, for a company to take over the world?
(After some thought, I suspect that this hyperbolic language is common in these types of articles, and the authors probably just equate “taking over the world” with “growth rates in excess of 20% on an annual basis.”)
Call me an idiot (wouldn’t be the first time), but saying that a Chinese company will “take over the world” in a discussion of growth suggests expansion overseas, an international branding strategy, and inroads into new markets. The authors never really say this directly, leaving us with this lead-in to their “You gotta buy this stuff” list:
[D]espite all the hype about China, many of us really don’t know many of the new consumer names. Even though as investors we’d be smart to have a clue. So we put this list together. Feel free to suggest even better names.
Indeed. You’d think that investors would have a clue. In fact, like most financial press articles, this stock picker piece has the usual disclaimer in it, telling folks that they shouldn’t just run out and buy these recommendations (wink wink), but should engage in a bit of due diligence investigatory running about and such (nudge nudge – {stage whisper}: don’t bother, just call your broker ASAP!) – before running out to buy this stuff.
The last interior headline prior to the list itself is this:
How Traders Are Making A Killing Off Of The New Chinese Consumer
Jeebus. Sadly, some people don’t have a clue at all. Amazingly enough, the worst is yet to come. Yes, I mean the actual list. I and my fellow members of the commentariat were expecting a list of Chinese companies that had made overseas acquisitions, expanded into the U.S. or Europe, or which somehow had unique products that looked poised to, well, take over the world.
What did we get? A list of domestic brands that might grow for a while – in China – but have pretty much zero chance of actually going anywhere beyond that. There are a couple of exceptions, but, well, I report, you decide. Have a look:
OK, now that you’ve wasted your time on this rant, why not waste even more time by telling the china/divide community which Chinese companies should really be on the “taking over the world” list. And if you have anything further to snark, I mean say, about the companies above and their prospects for world domination, by all means jump in.