The Exchange

Zombie Days: Friday May Bring Bad News Companies Would Rather You Didn’t See

The Exchange

By Marek Fuchs

When it comes to the stock market, investors should beware the Zombie Days.

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Allocine

World War Z

A Zombie Day is the Friday after a Thursday holiday. This Friday, July 5, will be a Zombie Day and, working together in the comments section below, we’re going to take a proactive stance in fighting back against it.

First, though, let’s delve into what a Zombie Day is all about. Though these Fridays are working business days, few pay attention. Most market participants are, say, sleeping off Thanksgiving hangovers or, in the case of this week, on the beach keeping their kids out of the undertow.

Companies rarely sleep

Companies, though – at least ones in any degree of trouble – rarely sleep. In fact, they take the opportunity of the quiet and inattention to release news they are ethically or legally obligated to but that they don’t really want you to see.

There has been a long, sordid history of bad news released on Zombie days – from presidents pardoning controversial criminals to companies admitting to stock backdating or firing thousands of employees.

Corinthian Colleges (COCO) still stands as a prime example. Back in 2006, this headline hit up in the Wall Street Journal on the Friday after Thanksgiving: Corinthian Says Option Grants Were Backdated. They had to release the news but were hoping no one saw. And few did. Welcome to Zombie Day.

Ironically, a portion of those options were originally backdated in the days after the September 11 terrorist attacks. Talk about a company with a tendency toward operating under cover of night.

And speaking of the time surrounding September 11 – only the heartless would have fired workers. That’s just what happened, though, when the United States Mint determined the slowing economy was lowering demand for coins. They didn’t want to be seen as cold, however, so they took advantage of a Zombie Day. The Mint timed the firings so that, on the day after Thanksgiving when everyone was zonked out on tryptophan, The New York Times ran with the headline: Facing Decreased Demand for Coins, Mint Starts Layoffs.”

Why didn’t Mint officials scream the news from rooftops? Then more than a few people would have learned that, headed into the first Christmas after a national tragedy, they were firing hundreds.

The sordid stories

We can go on…and on…recapping sordid news stories designed to slip down the Zombie Day cracks. More importantly, though, we need to work together to catch some of these news stories. If corporate and federal officials are relying on us to snooze or barbecue our way through Friday and use it to suit their purposes as a receptacle of bad news, we have to fight back.

The nonfarm payroll report on Friday might contain surprises (expectations are for around 165,000, and the number tends to be volatile in any given month), but will not in and of itself be a surprise. We know it’s coming.

What will the Jack-In-the-Box bit of news be? It is obviously metaphysically impossible to predict. But any company on the ropes or without a strong tradition of forthrightness tends to be the sort to gravitate to Zombie Day news releases.

And working together, we’re going to try our best to catch them, putting a klieg light on the news they want to go gently into that Zombie Night. Toward that end, please join me, on July 5, in posting in the space below any news you believe needs to be shouted to the skies. This will hopefully serve as a clearinghouse for news released on Friday that no one wanted you to see.

Will all the news you see below be the sort that companies wanted you to miss? No. Obviously, some of the news might simply coincide with July 5. Just because it is released on a Zombie Day doesn’t mean you should be automatically condemning. But always give the news an extra look.

Avoid a Zombie Day Apocalypse.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers before becoming a journalist who wrote The New York Times' County Lines column for six years. Fuchs speaks regularly on business and journalism issues at venues ranging from annual meetings of the Society of American Business Editors and Writers to PBS to National Public Radio. His recent book, "Local Heroes: Portraits of American Volunteer Firefighters," earned widespread praise. He is on the writing faculty at Sarah Lawrence College. When Fuchs is not writing or teaching, he serves as a volunteer firefighter. You can contact him on Twitter: @MarekFuchs.

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