Bear markets and the media

Back in the great TMT crash of the early 2000s, I was a sell-side telecoms analyst. The telecoms sector, especially in Europe, had experienced the most monumental bubble that peaked in early 2000 and then slid downwards for over two years. So basically, I spent three years covering stocks that went down continuously regardlessly of what the companies were doing. The chart below shows the best-run and best positioned mobile operator at the time, Vodafone.  

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That three year bear market was driven, fundamentally, by the fact that these companies had been far too expensive and the prospects for their future growth - in particular, how much money they would make from 3G - were quite unclear. This was actually entirely sensible. 

However, a lot of the media coverage and public discussion was far from sensible. One incident in particular stands out in my memory. At one point, probably in 2001, the CEO of Vodafone, Chris Gent, said something to the effect that if you were standing a long way from a base station, and didn't have a good signal, and there were lots of other people in the cell, you wouldn't get the highest possible 3G speed (at that time, 2 meg).

The headline on the front page of a major business newspaper the next day was 'Vodafone CEO admits 3G won't meet expectations'.

The paper's online archive doesn't appear to go back that far, so you'll just have to take my word for it. 

My point is that share prices generally move for good reasons, at least over the long term. There are real, cogent and sensible reasons why some investors are concerned about Apple's future growth and margins. The media's coverage of those moves is another matter entirely. Once the share price is going down, that becomes the story, and everything happening at the company is terrible.

The interesting question is whether the circle turns and negative coverage of a company's share price ends up affecting the consumer business. Generally, it doesn't, but there can be exceptions.