Sometimes a little bit of knowledge can be a dangerous thing

Ever run into someone who knew a little bit about your business but, based upon that snippet of knowledge, considered himself an expert? PR firms are occasionally bedeviled by the client executive who once took a journalism or editing class and now sees herself as a self-appointed Cronkite, Woodward or Bernstein. He’ll second-guess media pitching strategies, reject press release drafts and generally be a non-stop pain in the collective account team’s side.

What brings all this to mind is Leslie Stahl’s recent 60 Minutes piece "exposing" the "short sellers" who published negative reports about a Canadian pharmaceutical company called Biovail.

Egged on by a few "experts," Stahl lashed out at the hedge fund and independent research firm she says "conspired" to drop down Biovail’s shares so they could make some quick cash by selling short, as the Street calls the practice.

What Stahl doesn’t know and what Joe Nocera so adroitly explains in his recent NY Times article is that short sellers play a critically important role in Market dynamics (and, are almost always proven to have been accurate in their negative forecasts). That was the case with Enron, where short sellers were the first to spot the shady manipulations of Messrs. Lay and Skilling. In fact, short sellers are great at spotting shady or shaky businesses well in advance of others and driving down their shares as a result. It’s a healthy and critically important check on what would otherwise be continuous and unfounded Dotcom-era type stock euphoria.

Anyway, how sweet would it be for Ms. Stahl to run a clarification on Sunday’s segment of 60 Minutes? She’s unlikely to do so, since the program rarely admits fault. All of which proves once again that a little bit of knowledge can indeed be a dangerous thing.

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