I believe virtually everything I read, and I think that is what makes me more of a selective human than someone who doesn’t believe anything. – David St. Hubbins from This Is Spinal Tap (1984)

Josh Gerstein at Politico recently wrote a piece that compared how similar incidents during both the Bush and Obama administrations have been covered very differently by the press.  The gist of the argument being that Obama has gotten a pass from the mainstream media on these issues.  Gerstein writes:

It’s a sign that the media’s echo chamber can be a funny thing, prone to the vagaries of news judgment, and an illustration that, in politics, context is everything.

Politics aside, the important thing to take away is the fact that context in which a story appears matters a great deal.

To bring this notion around to financial matters, let’s take a look at Wal-Mart (WMT), the nation’s leading retailer.  It is not far-fetched to say that the company was one of the most reviled prior to the onset of the economic crisis.  Not many companies have organizations designed to follow and comment upon their every move.

The funny thing is that chatter about Wal-Mart has declined dramatically in the face of the financial crisis and the resulting economic recession.  As Hank Gilman at Fortune writes:

Let’s go to the numbers. If you did a database search, which my colleague Marilyn Adamo kindly conducted for me, there were some 47 stories in 2006 with the words “evil” within ten words of a “Wal-Mart” mention. So far in 2009: only two.

Gilman notes the many reasons for this decline including changed behavior on the part of Wal-Mart, even worse behavior on the part of Wall Street and “Wal-Mart bashing fatigue.”  He also notes that the value proposition for which Wal-Mart is best known is now an asset in tough economic times. Mark J. Perry at the Carpe Diem blog pulls together a number of threads that amount to what he calls the: “Wal-Mart Economic Stimulus Plan.”

None of this should be read as an endorsement of Wal-Mart as a company or the stock itself.  The fact is that the above news has not been all that positive for the stock.  After outperforming leading up to (and during) the heart of the economic crisis Wal-Mart stock has underperformed notably since then.

To look at it another way, one can see that the era of Wal-Mart bashing was coincident with the stock badly underperforming the S&P 500.  It is impossible to say in which way the causality runs, but it is interesting to note how when Wal-Mart was most reviled it was also a poor holding.

There are any number of examples like this where context affects how a message gets relayed to us by the media.  One need only go back a few years to read how residential real estate was a no-brainer.  Not coincidentally the peak in the housing market was right around the same time.  The fact of matter is that few wanted to read bearish housing stories at the time, and were therefore not written.

This is in no way an endorsement of knee-jerk contrarianism.  Just because the media is covering a story does not mean that is necessarily wrong or out-of-date.  But it is important to be aware of the overall context in which a story is being told.  Stories are one of the major ways in which we humans make sense of our world.  Just don’t get enamored with every story you read.

Disclosure:  No positions in Wal-Mart.

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