This is a transcript of the Deep Capture podcast episode
published on February 10, 2010.
You may:
It’s no secret that the Deep Capture message is not a
popular one in certain places. I’m thinking about Wall Street
and environs, specifically. In fact last month I was the subject of
a fairly lengthy profile in the New York Observer,
Manhattan’s alternative weekly, examining the deepcapture
phenomenon and the impact it’s had on Wall Street from
precisely that perspective.
In my interview with the Observer’s Max Abelson, one theme
that emerged was this idea that the market reform movement could
only take root in fly-over country because the culture of the
coasts — New York in particular — runs in direct
opposition to everything we’re trying to accomplish.
That’s not to say that there are no moral, law-abiding people
in New York or San Francisco, only that the extreme unpopularity of
our message would probably keep it from taking root there. It had
to be somewhere else.
And even though we’re making headway, as the mere
existence of the Observer story demonstrates, the New York press
— yes, even the alternative press — generally
does not do nearly enough to afflict the comfortable on Wall
Street. Sure, they’ll pile on when there’s blood in the
water, but dare ask hard questions of the Wall Street celebrity set
otherwise? Not going to happen, because the culture doesn’t
allow it.
How many business reporters did Harry Markopoulos brief on
Bernard Madoff during the decade leading up to his downfall? How
many sports writers apparently knew about Tiger Woods’
infidelities in the years leading up to his downfall? But in both
cases, nothing happened because the boosterism mentality endemic to
both Wall Street and sports journalism means there’s too much
to lose by sticking one’s neck out and challenging a
celebrity in either field.
Keep that in mind as you consider what follows. I want to
preface by saying that this is a very personal situation which
I’m certain is of much greater significance to me than most
anybody else. I recognize this and I’m not whining. Instead,
I’m telling this story because it illustrates a couple of
important and broadly-applicable market reform lessons.
Here’s the background…
In early December, I published a video suggesting that —
based on links revealed by their publicly-available Facebook friend
lists — there is more than a little substance to the
long-held suspicion that a group of well-known Wall Street
reporters and bloggers have close interpersonal ties with some of
the short-selling hedge fund managers they write about. I further
posited that these apparent conflicts might explain some of the
pro-short seller biases many (myself included) claim to have
observed in their writing.
I knew that this social network was only significant to the
extent that its own members regarded it as significant. In other
words, if it was composed entirely of people who view Facebook as a
proxy for a Rolodex, the network would be meaningless. If, on the
other hand, this network had dynamics comparable to real world
relationships — meaning, some degree of exclusivity based on
common interests — then it would be very significant,
indeed.
In order to find the answer, I created a fictitious Facebook
account and sent friend requests to every member of this group.
What I discovered was that I, as a stranger, only managed to
replicate about 20% of the network. With that, I knew I was on to
something, as the video explains.
And that was it. I didn’t need to be Facebook friends any
of these people to see who their friends were. I did it to
determine whether being Facebook friends with them actually means
anything.
Well, apparently it does mean something, because my video struck
a nerve among these folks. The real journalists kept
quiet…likely out of embarrassment, but the bloggers in that
network went on the attack like never before. It started with Gary
Weiss insisting that I’d gained this publicly-available
friend data, by hacking into
everybody’s accounts. Then he said that it was actually
Overstock.com (NASDAQ:OSTK) CEO and frequent Deep Capture
contributor Patrick Byrne himself who did the hacking. Bloggers
Felix Salmon, John Carney and Joe Wiesenthal swallowed this
easily-refutable line and regurgitated it whole on their own blogs.
A few times.
After that silly angle ran its course, Weiss escalated things by
announcing that I sent friend requests to many young children he
claims are connected to the people in the network, in order to get
their personal information so that I could harass and stalk
them.
And that was repeated, unexamined, by the same chorus.
Then Weiss revised slightly by saying that it was actually
Patrick Byrne who did the kid-stalking.
And that was repeated.
And just when I didn’t think things could get any more
ridiculous, Barry Ritholtz showed up.
Ritholtz, a fairly well-known (in fact, the Observer’s Max
Abelson called him “revered”) Wall Street blogger,
trader and recently book author, has consistently parroted the
position of the short selling mega hedge funds who oppose the
reform movement for obvious reasons.
Well, out of nowhere, Ritholtz latched on to the demonstrably
false notion of my having attempted to become Facebook friends with
young children, and created an entirely new reality, going so far
as to assert that I am a child molester. That is not an
exaggeration. In fact, he said as much multiple times.
Ritholtz then demanded a boycott of Overstock.com, saying the
company violates its customers’ personal information and
hires deviants to stalk their kids.
Did I mention Ritholtz has a law degree? But you don’t
need to go to law school to know what libel is. You barely even
need to be human.
Though I’ve been wary of Ritholtz and his motives from the
beginning, I contacted him, to set the record straight and
respectfully ask that he stop with the poisonous pedophilia
rhetoric. He received my messages, but ignored them and continued
as before. He also announced on his blog that if I sued him for
what he was saying, he would hire a private investigator to uncover
all my sexual secrets and very publicly broadcast them.
Anybody else sense something dark going on? What could possibly
be motivating this guy?
For authors, large market talk radio interviews are gold, as the
host usually gives the author 15 minutes to show off talking about
an area in which they’re particularly well-versed and promote
the hell out of their book. Talk radio listeners are very loyal and
engaged and they will buy books. For the author, it’s money
in the bank.
Well, recently Barry was invited to promote his book on the
finance-themed talk show “Wall Street Shuffle” airing
on a CNN Radio affiliate in Dallas, Texas.
Along the way, Ritholtz told the radio show’s producer
that he was hoping to use some of his air time to attack me and
repeat his call for a boycott of Overstock. The producer did the
responsible thing by giving me an opportunity to respond, if
Barry’s attacks warranted a response.
And one more thing: they didn’t tell Barry about this
arrangement beforehand.
And so I sat and listened on hold while Barry spent much of the
time any normal author would have dedicated to selling books,
attacking me and renewing his call for a boycott of Overstock
instead.
It was brutal. But better than describe it, you need to hear it.
Listen to this.
Barry Ritholtz issues not-so-vague threat
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Finally, the host broke in to say that it was only fair to give
me a chance to respond.
Before playing that tape, let’s consider what might
happen.
Assume Barry truly believes that I’m the monster he claims
and is justifiably outraged. In that case, considering how vocal
he’s been in condemning me in my absence, you’d expect
him to jump at the chance to give me the same treatment in
person…really make an example out of me, and get it on tape,
to boot. That would be gold for his boycott campaign and make him
look like a hero in front of at least 20,000 engaged, drive-time
listeners. Meanwhile you’d expect that I’d want to stay
as far away from that setting as possible, right?
On the other hand, what if Barry were repeating a lie and knew
it? What if he knew he could never back up what he was saying, and
was afraid of looking foolish (at best) and on tape, to boot? In
that case, you’d expect him to run while
I would leap at a chance to set the record
straight, right?
Well, keep those two scenarios in mind as you listen to what
actually happened.
Barry Ritholtz hangs up and runs
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Just like that, Barry was gone. While I regret not having an
opportunity to truly confront him, I am very pleased that I was
able to spend the remainder of what was to be
his segment discussing Deep Capture and the
market reform movement, and that the host was kind enough to invite
me back to continue the discussion.
As you’ll recall, I promised that this story had
application to more than just me. So what is the
moral of this story?
Remember, this took place on an investing-themed radio show
based in Dallas, Texas, not New York. I’m not sure it could
have happened in New York. That’s because I’m pretty
sure that Wall Street-themed broadcasts originating on or near Wall
Street are talking to Wall Street; while the people listening to
this show and the hundreds like it across America are mostly retail
investors…precisely the crowd most victimized by short-side
stock manipulation and most apt to support our reform efforts.
Herein lies both a problem and an opportunity.
The problem, I just described: Wall Street media culture is
getting better but has yet to break free of its celebrity-focused
ethic and is probably not going to critically examine the words or
actions of a Barry Ritholtz. They’re just going to hand him a
microphone. Consequently, in that kind of setting, a blogger living
in Utah is unlikely to get the opportunity to rebut something Barry
says, no matter how extreme.
The opportunity should be implicit in the problem: there are
plenty of Wall Street-focused talk shows broadcasting from middle
America where people generally place a higher value on fairness
than celebrity (as this recent example proves). Chances are,
you…yes you, I’m talking to you…know these
broadcasts well. If so, I’m hoping you’ll tell me about
opportunities in your area. My email is jbagley@deepcapture.com.
Send me a note and help us spread the word.
Click here to download the full Ritholtz/Bagley
segment from Wall Street Shuffle.
Barry Ritholtz and a tale of two media.
[12:35m]:
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Barry Ritholtz issues not-so-vague threat:
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Barry Ritholtz hangs up and runs:
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