Market Quakes When Dorfman Spakes
Amid all the high-tech gadgetry available to traders the Chicago Stock Exchange are television sets tuned to CNBC, the cable channel that features financial programming.
The reason: There is always a chance market commentator Dan Dorfman will say something that will generate trading.
Now, it would be naive and misleading to write about financial markets only from the point of view of big-picture economic and political news, as well as official company announcements. The prices of stocks, bonds, currencies and commodities certainly reflect that kind of traditional news. But they also reflect rumors, falsehoods, chicanery, insider trading and serendipity.
In that sense, Dan Dorfman may be as important to your stock investments as Federal Reserve Chairman Alan Greenspan is.
Here’s how “Smart Money,” a personal-finance magazine published by The Wall Street Journal, described Dorfman in its January issue: “This closely watched financial reporter has an on-air presence that’s frightening in its intensity. Words tumble over each other in a rushed, garbled, breathless manner that leaves some viewers wondering not what stock Dorfman is going to recommend but whether he’ll have a heart attack before finishing his daily 4-minute spot.”
On Jan. 13, a representative of one of America’s great companies, CocaCola, stepped beyond the normal buttoned-down role of a corporate spokeswoman to tell the press, “Dan Dorfman does not have a clue,” after Dorfman reported that day that Coke might make a bid for Chicago-based Quaker Oats.
No fewer than eight times since June has Dorfman issued reports on Quaker that have prompted its stock to gyrate in heavy trading on the New York Stock Exchange. Indeed, there’s probably no major company that has been the subject of so many Dorfman reports in a similar period. None has panned out.
Quaker has stuck by a “nocomment” policy on each occasion, including the report concerning Coca-Cola. Ron Bottrell, the company’s chief spokesman, didn’t take the bait when asked whether he agreed with Coca-Cola’s put-down of Dorfman.
But another company on Dorfman’s radar screen was less reluctant. Incomnet, a California-based technology company, said that it agreed with Coca-Cola after Dorfman reported that the Securities and Exchange Commission was investigating the company for “unsavory” business practices.
Incomnet said “it is categorically false that the company is under investigation by the Securities and Exchange Commission or any other regulatory body for ‘unfair and unethical sales practice’ as reported on CNBC by Dan Dorfman.”
By Thursday, however, Incomnet had changed its tune. “There is an investigation being carried on by the Securities and Exchange Commission,” declared Chairman Sam Schwartz. Score one for Dorfman.
There’s nothing pristine about information flow in the stock market. Dorfman is a participant in a rough-and-tumble process of buying and selling. He is not a professor of journalism. Fairness, accuracy and balance are not at the top of his lexicon, but neither are they in the lexicon of many men and women trading stocks.
“My whole approach is to report on activity in the stock market,” he said. “I’m not predicting anything. I’m not responsible for market action.”
Dorfman insists his stories come from sources that haven’t burned him and that frequently there is activity in a stock before he passes on a market rumor. He doesn’t check out rumors thoroughly, because in stock trading a rumor is a thing unto itself. If Dorfman says it’s a rumor, he means it.
“I’m not smart enough to understand who is right and who is wrong,” he said. “The only thing I care about is that the information I’ve reported is substantiated by what’s going on.”
Asked whether he can be used by unethical traders to inflate a stock’s price, Dorfman said, “We use the users, but it’s for us to determine whether it’s worth reporting.”