I'd like to direct you to an excellent Warren Buffett related post written by Jeff Miller of A Dash of Insight. Buffett's annual letter to shareholders is immediately read, analyzed, and reported on – though not necessarily in that order. Obviously, instant on air reports meant to give you the highlights of the letter within moments of its release should be completely ignored by anyone who has an interest in understanding what Warren wrote.
I excuse such reports, because they don't even pretend to be serious reporting – they're instant regurgitation and they look the part. In prior years, Buffett's annual letter was exempted from such "breaking news" treatment; however, due to SEC regulations this year's letter was released on Thursday instead of Saturday.
Not surprisingly, coverage of the letter suffered from the early release. But, that's not what I'm writing about in this post – and that's not what Jeff Miller wrote about over at A Dash of Insight.
While reading the letter on Thursday, I came across two words I knew would be misinterpreted: “soft landing”. This misinterpretation is somewhat understandable coming from someone with a background in financial reporting and no knowledge of Buffett, since the term "soft landing" is usually used to describe a possible outcome of Federal Reserve tightening.
Unfortunately, if a reporter is somewhat confused about all this, the reader is doubly damned. A quote alone would be confusing enough for someone who doesn't know Buffett isn't in the habit of making short-term macro economic calls in his annual letter. When a quote from Buffett's letter is set within the body of an article authored by someone who isn't entirely clear on what Buffett meant, the reader has little hope of leaving the article without a misconception.
To be fair, there is nothing factually incorrect about the Reuters story Miller links to.
Unfortunately, readers get more than facts from a news story. The overall impression from this Reuters story doesn't fit well with the impression created by reading the actual letter. That's mostly due to the decision to lead with these words:
Warren Buffett said on Thursday the U.S. economy may not enjoy a 'soft landing' because Americans are taking on too much debt as the U.S. trade deficit worsens.
Although this lead is factually correct, it misinforms the reader. Worse yet, in this electronic era, the Reuters story (rather than a careful reading of Buffett's actual letter) may serve as the germ for another writer's story. In this case, the reader who gets his information third hand will be an unwitting participant in a game of telephone – hopefully he has the good sense not to pass the message on.
There is one good thing to come out of such reporting – it may kindle a desire among some investors to consult the primary source. It's quite a source.
If you haven't read it yet, now's your chance.