Investor Points of Few – The Merchants of Menace


By Alan Steel

I think sometimes we don’t give enough spotlight to the problems that all these incorrect market diagnoses cause investors; steering the herd in the wrong direction has become big business, and far easier to execute with the fundamental shift in communications brought about by technology over the last few decades.

Now, I’ve spent a bit of time on some of the main market prevaricators misleading public opinion. These merchants of menace, so to speak, shower the press, email marketing and social media channels with continually wrong predictions under the guise of some kind of fortune-telling expertise.

As I wrote in my February Letter from Linlithgow entitled Whether Report:

“Those referred to as ‘gurus’ are the worst of the lot when it comes to predictions.  John Mauldin has over a million followers despite saying eight years ago that, ‘If you expect a major bull market to develop in this climate you are not paying attention, and need your heid examined’…” (I added the last four words, but you get the drift).

“And ‘Dr Doom’ Nouriel Roubini, a darling of the media said at the time, “My predictions for the coming year unfortunately are even more dire.’  Echoing his gloomy sentiment was Harry Dent who charges $90,000 a day plus first class air fares from Florida for his services.  (Who says pessimism doesn’t pay, eh?)  Harry’s been predicting 50% market falls every year since 2011.  Well, do you want some good news?  He’s at it again now. If he turns optimistic again you’ll be the first to know.  But as a rough guess I’ll likely be renewing my new driving licence before then.”

But it goes far beyond the celebrity analysts: Two days ago headlines suggested the $Dollar falls as the FTSE rises. Then it was the pundits claiming the so-called ‘Trump rally’ was now over as the Dow Jones fell for eight days in a row and the £Pound converted at over $1.26.  

Yesterday came and…surprise, surprise…the £Pound is back below $1.25 and the Dow Jones, which had ‘slumped’ a mere 1.8% over the week, went up 150 points. 

In fact, it seems I can’t even drive into work without the local stations pitching in with all this financial ‘Radio Ga Ga.’

This week I caught about 10 minutes of a phone-in about pensions and investments on one of the Blind and Blinkered Corporation’s (BBC) radio channels.

What a palava!

The host, relaxed in the knowledge that her misleading opinions and bad advice would go unpunished by our near-pulseless financial Regulator (the FCA), had set about influencing her listeners to disregard pensions in favour of ‘alternative’ investments.

It was like a continuous loop of, “So you think pensions might not be worthwhile then…?”

All of this bad advice keep stopping folks – even relatives of mine – from smarter investing, and instead motivates them to stash their savings in cash year after year (in the lowest interest rate environment in three hundred years) waiting for this well publicised Armageddon that never seems to arrive. 

And what of the perpetrators? Do these crap merchants get away with it.

It’s worse than that.

The shock horror pessimism is rewarded as ‘Outstanding journalism’ at glittery award dinners, and sales of their newsletters flourish with the lost cash of their readers.

Simply put: Don’t believe it until you check it out.

Then go and find someone with a long-term track record of investment success who won’t default on the truth.

Because after all, it’s your money.

Alan Steel, Chairman, Alan Steel Asset Management

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