The perils and merits of financial journalism

Lisa Pollack of The Financial Times writes about the difficulty in covering the markets when dealing with sources.

Pollack writes, “Stories like this remind us of the perils, and potential merits, of financial journalism. If you have a moment then, put yourself in the shoes of a journalist covering markets…

“… now picture that someone, or maybe several someones, call you and claim that so-and-so is distorting the market. Now, this is something your readers would be no doubt interested to know. But of course, you need to do more research. Figure out who’s telling the truth. Is this just one angry person with a vendetta (and a trading position to match) or is this the tip of an iceberg?

“If it turns out to be an iceberg, then it’s a matter of serious, justifiable interest. But what if there are only a few people who can verify the allegation? And what if they are only guessing anyway? Should you report on guesses when numbers of guessers are large enough? What is enough evidence, really?

“In financial markets, when there are so many factors at play, how confident can one ever be about what caused a given movement in a stock, yield, or credit spread anyway?”

Read more here.