If I were a gambling man and a patient man (and I’m neither), I might take a look at buying certain newspaper stocks about now.

You can get 100 shares of McClatchy for $445, 100 shares of the New York Times Co. for $1,255.  Assuming that either comes through the current revenue crisis with a workable business model, they will be worth a multiple of today's share price a few years hence.  If not, you might be out most of the $1,700.

But why bet against the wisdom of the market?  The market these days consists almost entirely of institutional investors whose performance is typically evaluated on how their portfolio performs over a period of 18 months to two years.  That in turn determines whether they are hired or dropped to manage pension funds and other big blocks of money.

If the newspaper industry does recover and find its feet, it will probably not be that quickly.  By my best guess, the impact of the economic downturn, especially on real estate and related businesses is likely to be with us at least through 2009.  And, as I argued in my News U webinar presentation earlier this month, it is going to take roughly that length of time to sort out which potential new revenue streams can make a meaningful impact replacing print classifieds.

So I translate Wall Street’s trashing of share values as partly a statement that this industry (and its stocks) is not going to get well soon enough to fit fund managers’ goals.

I’m not here to claim that Internet marketing is a passing fad and that those revenues lost to Google, Craigslist and their brethren will come roaring back.  But the newspaper industry remains cyclical as well.  Revenue losses attributable to an economic downturn will bounce back sooner or later -- and I think the boost will be bigger than the doom-and-gloom crowd is saying.

A Business Week article linked by Romenesko Friday makes a detailed case that Wall Street has undervalued New York Times Co. stock.

Playing an investment hunch on newspaper stocks would be appropriate for a high-risk kitty –- not your life savings.  Among the well-cataloged perils, debt is at the top of the list.  McClatchy still has maneuvering room (and has been paying down what it borrowed to buy Knight-Ridder).  But particularly adverse circumstances could leave the company at the mercy of its creditors, even if its collection of papers is still turning a profit.

Also, while I am not a subscriber to the dying industry rhetoric so common today, there is at least a chance that the movement of audience and advertising into digital media (but not newspapers’ own digital ventures) will accelerate.  Phil Meyer of the University of North Carolina has argued that monopoly pricing power of the good old days is gone forever.

Given short-run prospects, you could make the case that newspaper stocks are very likely to fall even further.  If so, there are bigger bargains ahead for those tempted to take a modest flyer on industry shares.
 
Equally likely, however, is that the fear factor of the worst scenarios is already reflected in stocks that have lost half or in McClatchy’s case, 80 percent, of their value over the last year.  In that case, even a modest turn for the better in results or prospects could begin to send share prices back up.

By the way, a discussion of stock prices and their potential is purely theoretical for me.  My investment adviser picks our portfolio of fund investments.  I don't know what stocks (and thus what media stocks) those funds may hold and don't buy any media stocks individually.