Investor Points of Few – The Greatest Fake News Story Ever?

Lincoln

By Alan Steel

Think about how quickly things move now, particularly since the Internet revolutionised the concept of distribution and made short work of industry sectors like newspaper publishing.

Here’s a good example of what I mean: Check out the time it took for each of these communications channels and devices to reach a market audience of 50 million people: 

  • Radio – 38 years
  • Television – 13 years
  • The Internet – 4 years
  • The iPhone – 3 years
  • Instagram – 2 years
  • Angry Birds – 35 days

Now, I confess that I personally fall outside of the fast 50 million who have had contact with an angry bird (excluding my wife, Fran, this morning), but it does serve to highlight how quickly the world can now get connected. 

However, there are also problems that naturally follow that type of communication speed, and the subsequent communal mindedness created in a hurry by it. And one of the main victims of rapid communications has, and always will be, the facts.

My Managing Director, Steve Forbes, wrote recently about this issue in his article For Fake’s Sake, saying:

“Fake news is constantly in the headlines these days.  Even the Oscars got in on the act by announcing a fake winner for best picture.  However, if news actually is fake does that mean the headlines about it are made up?  It is all very confusing….

“I have said numerous times before that you need to take a step back from what you see and hear from the media as the need to create fear amongst people to get sales or clicks is their raison d’etre.  As well as this there is often a spin put on whatever is reported to either suit the politics of the readership, in the case of papers, or the views of the journalist.

“Just last week I heard a classic example on the radio news.  It was reported the number of people in the UK that have booked a holiday to the US was 20% lower than a year ago “as a result of Donald Trump becoming President.”  Really?  People have told their children that they can’t visit Mickey Mouse because Trump is now President?”

But even before there was an Internet, or even radio, the issue of ‘fake news’ was a problem; one that almost destroyed the 16th President of the United States, Abraham Lincoln.

History is in fact littered with examples of manufactured news – Wall Street has made a $multi-trillion business out of misinformation. 

A quick look at any weekly picture of the American Association of Individual Investors (AAII) sentiment survey over the past eight years, since the market changed from recovery mode in late 2013 into a full blown secular bull, shows how out of touch the investor herd is with stock market reality. 

Sentiment remains at recession levels, even as this week marks who the major stock market indexes have recorded their eighth year of secular bull behaviour and record breaking highs. 

And the lion’s share of the media coverage, coupled with the general public’s unwillingness to read much past the headlines, has led to a combination that builds full blown Boston tea parties out of a spot of hot water.

“In my 40 plus years since becoming an IFA I’ve learned that the best times to invest in equities are when economic and market ‘experts’ are at their most pessimistic about prospects.  Even now, after a powerful Secular Bull Market they didn’t see coming eight years ago, sentiment is still statistically pessimistic. And that’s a fact.”

So, try not to get drawn in by all the pamphlet writers. 

Check the facts instead and then get some good advice to support them.

There are always going to be a lot of angry birds out there, but that doesn’t mean you have to play their game.

And after all, it’s your money.

Alan Steel, Chairman, Alan Steel Asset Management

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