Plurality of financial audiences

I consider the middle-aged Caucasian man in a business suit to be my enemy, and I do not underestimate him. That man - the man who really controlled the stock market during its pre-Internet phase - was a professional money manager, banker, or stockbroker.

As long as there was an inside, and I wasn’t in it, playing the stock market was a dangerous game.

(Anuff and Wolf, 2000: 140-1)

The deepening connection between the media and international finance is further complicated by another element: the size and composition of the audience. In the past, the audience for international finance was comparatively small and well- defined by market segment, expertise and means of dissemination. This is apparent, for example, in the historically modest (but recently growing)² circulation figures of the principal broadsheet newspapers such as the Financial Times or the Wall Street Journal. However, if finance was a specialist arena in even the recent past, financial deregulation and the growth of personal investment spawned a growth in, and a transformation of, the audience for financial infotainment (Livingstone, 1999). Consequently, contemporary financial audiences have a number of critically novel characteristics. First, these audiences are heterogeneous. Whilst they continue to include professional financiers, financial advisers and sophisticated retirees, the discursive and economic centrality of financialized capitalism has meant that groups of untrained amateurs who run investment clubs, (a small number of) teenagers wagering their pocket money, and people who simply want to keep a weather eye on their mortgages, insurances and pensions (Lewis, 2001) are a ready audience for financial journalism.

Second, and consequent, contemporary financial audiences display much greater levels of financial literacy than in the past, in part precisely because of the barrage of financial media information and advertising. Terms like “selling short” have become a familiar discursive currency and some households now pursue sophis­ticated, carefully deliberated accumulation strategies involving close attention to the timing of market events and other participants’ choices and options. Though most households do not reach these very high levels of sophistication, their expertise

has been “bulked out” by a growing army of market intermediaries who have become both a key extension of the production of financial knowledge and a constitutive audience in their own right.

Third, contemporary financial audiences are much closer to financial markets and may, indeed, be directly involved in them. Emphatically, the underlying geography of finance remains unchanged and as markets integrate and national states adopt common standards and codes, trading through electronic systems is increasingly concentrated in just a few global markets (Clark, 2002; Laulajainen, 2001). However, real-time electronic communications and media images allow even remotely-located market participants to feel as if they are trading on the floor of the London and New York stock exchanges. In just a short time, Internet banking acclimatized people to making electronic transactions and, particularly during the dot.com boom, a group of these moved into online stock trading. In turn, stimulated by a constant drip feed of information from the financial media, consumer demand for financial services has become continuous, following the ups and downs of the markets in response to the (near) real-time display of events and prices. More and more of the growing financial audience expect a degree of market volatility and anticipate the opportunities for arbitrage between stocks and markets: consequently, the growing demand for real-time passive and active electronic and visual media images.³ In feeding these expectations, providers’ standards of service are constantly critically questioned, albeit from a position of weakness, by their consumers.

The canonical example of this phenomenon in motion was the 1990s high- tech boom. By the late 1990s, many investment funds’ managers were belatedly concluding that as stock market growth was unsustainable and in “bubble” conditions, their investment strategies should become more defensive. Simultane­ously, however, retail consumers, “educated” by financial infotainment and advertising and deluded by projections of their paper gains forward into the future, directly (by switching out of “underperforming” stocks and even, in one notorious case, suing Philips and Drew) and indirectly pressurized funds into maintaining their dot.com investments. Consequently, demand for investments in high-tech meant that high-tech stock values kept accumulating, drawing in more and more marginal players while holding in check even institutional investors convinced that - although the bubble may explode - they could time their market exit (Shiller, 2000; Williams, 2001). In other words, the watching audience became powerful players in their own right, rather than being simply represented in the markets by knowledgeable professionals. While financial institutions may have been privately alarmed by the speed of the escalation of stock-prices (and not all were), they were also driven by audience expectations. On this level, then, assumptions that may have held in the past that financial consumers will comply with professional judgments no longer apply There are critically important alternative mediating channels and modes of intervention.

Added to this, however, the corporate sector is increasingly active in “managing” financial news including reported earnings and assets and liabilities (Lowenstein, 1996). With senior managers’ stock options and compensation tied to the market value of their firms, corporations have sought to bypass market analysts and experts

Performingfmance 171 by appealing through the media to market participants.⁴ All large corporations have press offices that attempt to manage “their” news, reaching out to various kinds of investors through the usual road-shows and by attempting to manipulate the more general climate of opinion.

There is (or was), however, one group drawn from within the financial knowledge community itself which has developed a critical role as mediators of knowledge - but only by deploying the new channels of mediation themselves. These are star investment analysts. Investment analysis theoretically provides relatively information­poor investors with the ability to choose between different stocks or bonds, as dedicated professionals interrogate the “economic fundamentals” of a company’s balance sheet or corporate strategy However, two major changes in investment analysis have taken place since the 1980s. First, as companies have wished to maintain their share prices, they have increasingly employed financial PR agencies to influence journalists and analysts. Second, mergers and acquisitions between investment banks, stockbrokers and so on has led to potential conflicts between disinterested investment advice and investment banks increasingly treated in-house analysts as marketing departments for fee income generating services. The result is that investment advice tends to be positive (the Wall Street Journal, 1999, calculated that two thirds of stocks were recommended “buys”, one third were “holds” and only 1 per cent were recommended “sells”), coded (even relatively unsophisticated investors may not correctly interpret “long-term hold” correctly as meaning “sell”) or dishonest (Golding, 2001: 201, for example reports “one analyst talking to a fund manager: ‘We are putting out a “buy” recommendation on Company X - it is spelt S E L L!’”).

The consequences of these trends are, by now, all too evident. For all the informa­tion in the market about stocks and prices, a paradox of the new financial literacy is that information is both less valuable in its own right and harder to judge in terms of its integrity. Information is not knowledge.

The reach of financial professionals has, consequently, increased markedly over the past decade. A network which hitherto largely consisted of large corporations

and institutional clients has now expanded to include a heterogeneous range of financial consumers, often with their own active opinions and opinion makers. Hence the rise of an active audience information-gathering industry that can take in and work on the proliferation of calculative agencies, all searching for and constructing various kinds of financial consumers, either through demographic profiling or increasingly through more sophisticated psychographics (Machauer and Morgner, 2001). This new mode of financialized capitalism is most marked in the United States where retail-orientated firms like Fidelity and Schwab developed a mass-market for traded investment products. Although only the very largest financial conglomerates can reach so far down into the retail market (and are now, in the wake of the dot.com crash, withdrawing from its lowest reaches), it still seems likely that this experience will be vital in Europe as national states increasingly emphasise personal responsibility in providing an income in retirement (Clark, 2002).