Fraud In Numbers (Home Sales)

Headline: New Home Sales were up.....

"Aug. 26 (Bloomberg) -- New-home sales in the U.S. improved in July from a 17-year low and construction cutbacks by builders reduced the glut of properties on the market by the most in almost five decades."

Truth: Last month's sales were revised down to 503 from 530.

515 - 503 = 12

But 515 - 530 = -15

So if you actually report based on the original releases, new home sales were negative from the previous report.

Now to be fair, the Bloomberg article cited did show the revised number and the truth - in the second paragraph.

But the headline is false.  In truth it is "New Home sales continued to decline from already abysmal levels reported last month."

This sort of nonsense is found in all sorts of economic reporting, and is a big part of where the "pumps" come from in the market.

The problem with this sort of "reporting" is that it is intentionally - and catastrophically (if you listen to it) dishonest.

What does this mean for you as an investor?  It means you have to read the entire data release, and keep the previous ones around so you can detect this sort of "gaming of the reporting", lest you gain a flawed belief of what is going on with the macro economic picture.

If you're a trader, then you're probably already used to this sort of "bullish bias" in the media and reporting, or you'd be broke by now.

But for so-called "long-term investors", that is, Joe and Jane who have a 401k or IRA, if you listen to CNBC and other forms of "financial reporting", keying on the headlines as we know America does with its 30-second attention span, you are going to make some extraordinarily bad decisions with your investments.

Can we ever put a stop to this?

Yes.

Stop buying things from the companies that advertise in the media that "report" in this sort of fashion, and tell the advertisers why you won't buy their products.

There is only one way we will ever see turth come to the forefront and this sort of "reporting" be retired from the American scene, and that is if we impose fiscal punishment on their source of funds - their advertisers.