Sat in on a Webinar yesterday on “The 15 Most Common Mistakes Found When Editing Business Stories,” sponsored by the Donald W. Reynolds National Center for Business Journalism in Phoenix AZ, and conducted by Christopher Wienandt, business copy chief at The Dallas Morning News.
Here’s the link to the site, thanks to the folks at the Center: http://businessjournalism.org/2011/03/31/15-red-flags-when-editing-business-stories-self-guided-training/
The Webinar was for business news reporters and editors, but Wienandt’s advice is good for investors, too. More than 50 people were in on the event and sometimes things got a bit rowdy, since it was interactive and we could type comments and questions whenever we wanted.
Wienandt advised paying careful attention to the following common mistakes:
1. Millions of dollars mixed up with billions. Could be a simple typo, but when a business story reports XX million in revenues or earnings for a multi-billion dollar company, it’s time to double check.
2. Get percent changes right. This is a huge challenge for innumerate reporters (and editors, too), but an easy rule of thumb is that percentages are calculated from the earlier period to the later period. Quiz: if 3000 houses were built in January 2011, and that is a 10 percent decrease from January 2010, how many houses were built in 2010? [Ans. .90/3000 = 3333]
Surprising admission from IFO – she still struggles with this!!!
3. Know the difference between percent and percentage points. If interest rates decline from 3% to 2%, that is a one PERCENTAGE POINT decrease, but a 33 PERCENT decline. [1/3 = .33 x 100 = 33%]
4. Get names of companies and govt agencies right, including apostrophes. Not as important for readers as for reporters, but if reporters get that wrong it can indicate sloppy, careless reporting.
5. Earnings reports: Don’t confuse revenue with earnings.
6. Earnings reports 2 – get all parameters in the story: time periods compared to prior time periods, total amounts, per share amounts.
7. Earnings reports 3 – check on changes in sales for various industries to compare with the company you are reporting on or researching.
8. Earnings reports 4 – be clear about seasonality and context – is this year over year, or quarter over prior year quarter, or this quarter compared to previous quarter? Actually, it’s better to look at the company’s press release which has all the numbers in graph form at the bottom of their earnings release.
9. Style question: how to refer to sales of homes that have already had one owner? Currently, the preferred term is “existing” homes, but some reporters on the Webinar suggested “gently used.”
10. If you are reporting on foreclosures, be sure to understand the legal process. For example, posted foreclosures don’t always result in actual completed foreclosures. Also, a Notice of Default is just the first step in the foreclosure process.
A local reporter got all confused by adding up all court actions, then found out that there were at least two actions per distressed property. Hence, he vastly overstated the number of troubled mortgage holders there were in our county. Investors can make the same mistake if they don’t do the research.
11. Be careful when processing company announcements of changes in control or management. Did the company or reporter say company X “will buy” company Y? or “has completed the purchase of” company Y?
12. Be careful with titles, especially when used as acronyms, “a word formed from the initial letters of the several words in the name.”
13. Make sure graphics make sense. Check the numbers reported to see whether they conform to the graphics.
14. Choose graphics that fit the numbers and story you are trying to clarify.
15. Don’t take jargon from press releases. “leading producer of…” CEO and other quotes, which are usually just useless fluff. If you, as an investor, see this in a “news” story, you should be aware that you are probably reading a company press release. That’s not so bad with an earnings report, but many press releases are part of “pump and dump” schemes. [SEC says: to tout “a company’s stock (typically microcap companies) through false and misleading statements to the marketplace. After pumping the stock, fraudsters make huge profits by selling their cheap stock into the market.”] Shocking, IFO knows, but she has seen it right here in River City.