We often start writing about a topic when we see an unusual or interesting angle develop. Last summer, the New York Times wrote a story about the rivalry between Erin Burnett, the new star of CNBC and Maria Bartiromo, CNBC’s standard bearer. As a Bollywood Rasik, we are no strangers to diva-rivalries.
So, we wrote an article* about looking at CNBC from a Bollywood Rasik’s perspective. At that time, the Katrina-Bipasha rivalry had reached a point in Bollywood where the two divas refused to say hello to each other in public. Amazingly, we saw the same behavior between Maria Bartiromo and Erin Burnett on the morning show on July 22, 2008. That prompted us to write the second article** comparing the Erin-Maria rivalry to the Katrina-Bipasha rivalry.
Sometimes points made in jest have a reality of their own. On Friday, April 17, 1009, CNBC celebrated its 20 year Anniversary. The veterans of CNBC and CNBC management rang the bell at the NYSE that morning. Erin Burnett was there because this event took place during her show. Then the group gathered on the NYSE floor and began sharing their fond memories.
Maria Bartiromo and Erin Burnett stood fairly close to each other but separated from each other by Mark Haines, the co-anchor of the show. During the next nine minutes, the entire group enjoyed their moment of camaraderie.
But, Erin and Maria did not say a single word to each other. Forget talking to each other, these two divas did not even look at each other during the entire nine-minute segment, Now, this is what we call a rivalry. Don’t just take our word for it. Look at the clip at http://www.cnbc.com/id/15840232?video=1095973538&play=1 and judge for yourself.
While things stay the same, sometimes they evolve. The cold war between the USA and USSR evolved into a war by proxies. Each superpower would get its allies to engage the allies of the opposing superpower in their dispute over an issue or a territory.
This year, we have seen this sort of proxy war begin between Bartiromo and Burnett on the central issue facing the American economy – whether America faces deflation or inflation. It appears that the two CNBC stars have opposing viewpoints on this topic. In the USA-USSR fashion, the two CNBC anchors seem to be expressing their viewpoints by choosing their allies and interviewing them on their shows.
Maria Bartiromo interviewed Larry Fink and Peter Fischer of the great Bond Firm BlackRock on her show. These two luminaries firmly believe that, with inflation in America turning negative, long-maturity US Treasuries are cheap and the yields on 10-Year Treasuries could fall from their current high real levels.
Erin Burnett has selected the great Bond Firm of Pimco as her ally and interviewed Bill Gross and Paul McCulley of Pimco on her show. These two luminaries (with their colleague Mohammed El-Erian) have argued that long-maturity treasuries are expensive and yields on 10-Year Treasuries could rise from their current low levels.
In case, you did not know, BlackRock and Pimco are very competitive rivals, just like Bartiromo and Burnett.
We think this Erin-Maria battle by proxy has another interesting investing dimension to it. In our opinion, these two divas represent two distinct and opposite investment styles.
We have been intrigued by the transformation of Maria Bartiromo. After all, she was the head cheerleader of GLG2 (Global Liquidity Global Growth) during the boom years. But, she seems to have realized that theme has changed and she has changed her coverage to fit the changed landscape.
In other words, Maria seems to be an adherent of the popular investment style called “Trend-Following”. These investors try to make money by following a trend tenaciously. They do so until the market convinces them that the trend has changed. This is the investing equivalent of the basketball dictum of Chuck Daly, the winning coach of the Detroit Pistons. Chuck Daly always preached “when a play works, keep running the play until they stop it”. This style can provide huge rewards during the boom years of the trend. The trick to successful trend following is knowing when to get off the trade. That is not easy. Every Investment Bank played the trend-following game in the Credit Bubble. Only Goldman Sachs was smart enough to get off that train before it crashed.
Erin Burnett was not as gung-ho about the credit and equity boom as Maria Bartiromo was. In fact, Erin kept looking for signs that showed that the consensus was wrong. Now, that the trend has changed, Erin is resisting the down trend towards deflation. She is focusing her energy on finding signs that suggest that inflation will resume its upward trajectory.
Erin seems to be an adherent of the other popular investment style called “Mean-Reversion”. These investors focus their energies on identifying signs that point out a reversal of the current dominant trend and take positions that will benefit from this reversal. The trick here is to time your entry just right. Being too early can be devastating. Just ask investors who shorted internet stocks in 1999 before that trend finally reversed in mid-2000. On the other hand, this style can provide huge rewards if you time your entry right. Look at the fortunes that were made by shorting sub-prime debt in 2007. This is the investing equivalent of the Wayne Gretzky dictum “you got to go where the puck is going to be, not where it is today”.
So, when you watch Erin or Maria, think of these two investing or personality styles. It might help you in getting the most value out of their shows.
Getting back to the diva-rivalry, the Bipasha-Katrina rivalry seems to have cooled down in Bollywood. We are glad to see that the Bartiromo-Burnett rivalry is still going strong. That we take as CNBC’s Anniversary present to us viewers.
** “CNBC Stars – Bartiromo and Burnett – A Bollywood Rasik’s Perspective” – July 26, 2008 – http://www.cinemarasik.com/2008/07/22/watching-cnbc–bartiromo–burnett–a-bollywood-rasiks-perspective.aspx
* “Watching CNBC – A Bollywood Rasik’s Perspective” – July 12, 2008 – http://www.cinemarasik.com/2008/07/12/watching-cnbc–a-bollywood-rasiks-perspective.aspx
Editor’s Note; As in our previous articles on this rivalry, we remain alphabetically correct in this article. When we use last names, we begin with Bartiromo’s name and end with Burnett’s. When we use first name, we use Erin’s name first and then Maria’s. In addition, we remain neutral in this rivalry by using each sequence of names an equal number of times.
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