Beware TV reporters offering investment advice about stock market falls

23rd September 2011

The reporter said that markets were down and the news had driven US investors into the "safe haven" of bonds, causing bond yields to drop to the lowest levels since the 1940s.

That was bad enough, but she went on to advise people to keep an eye on the markets day to day.  You might not think it affects you, she said, but people have pensions and savings, and gave figures about the amount in ISAs, apparently intended to make people stay glued to market information.

There's so much concentrated bad advice there that it's hard to fit comment into a post, but here goes:

Read more…

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11 thoughts on “Beware TV reporters offering investment advice about stock market falls”

  1. Anonymous says:

    Shaun – most insightful. I read today that Mr. Papademos is suggesting that a third bail-out may well be on the cards as “nobody can foresee the markets in 2015”. For the average Greek citizen this means, in my opinion, that they can look forward to a further decimation of their standard of living; meanwhile the EZ continues to promote medicine known not to cure. On a lighter note I have just read the following on the “Open Europe” news:
    “EU officials working in EU Council President Herman Van Rompuy’s office have created an unofficial press release suggesting that the Vatican should be invited to the next Eurozone summit because “The presence of His Holiness the Pope affords an opportunity to pray for divine intervention to save the euro. This is now seen as the most credible strategy.”

    I say no more……

    1. Anonymous says:

      Hi Ray

      Is the last bit an early entry for an April the first edition or reality? Sometimes these days it is really hard to tell…. :)

      Also if Mr.Papademos can forsee that markets before 2015 perhaps he might let the rest of us in on it!

      1. Anonymous says:

        Iceland took about 3 years after default before it was able to return to the markets. Greece should copy Iceland’s default and then it might be able to return to the finance markets before Dec 2015 ….

  2. Andy Zarse says:

    Hi Shaun a good analysis of the failings of current economic theories, as being implemented in the Eurozone. Theories are one thing, the reality is how it affects the lives of ordinary citizens. It seems a gratuitously cruel experiment with youths and pensioners playing the roles of the lead laboratory rats. I just wonder how long it is until the rats wake up and make good their escape?
    Talking of inflation, I guess you’ve seen the excellent article on the subject this week from your blogosphere nextdoor neighbour Simon Ward?
    “In a Guardian interview a year ago the MPC’s leading dove, Adam Posen, predicted that inflation would tumble to 1.5% by the middle of 2012 and stated that: “If I have made the wrong call, not only will I switch my vote, I would not pursue a second term.” Will Dr. Posen honour his pledge or try to shift the goalposts by appealing to economic weakness or claiming his forecast was blown off course by yet more “one-off” shocks?”
    I like Simon’s use of the term “economic weakness” meaning more inflation, I guess he sees things the same way as you! H But, has Posen got any “wriggle room” do you think, or will he be bidding us, the MPC and his index linked pension au revoir?

    1. JW says:

       Another nice quote from Simon;
      ‘The sustained UK inflation overshoot was predicted by a monetarist
      forecasting approach, as detailed in previous posts here. The Bank of
      England either has the wrong model or is deliberately contravening its
      I think we know which it is.
      Netherlands starting to edge towards the ER. Still Germany has lower unemployment, must be worth it all then……

      1. Anonymous says:

        Actually in terms or Simon’s quote about the Bank of England the recent model chage I talked about in my review of the speech by David Miles means that I think both were at play.

    2. Anonymous says:

      Hi Andy

      I doubt will be surprised to read that I had remembered that quote from Adam Posen. In terms of wriggle room he may be able to push the dates to September as that is when he usually gives his key note speech for the year.

      In terms of using alternative inflation indices he would be on very weak ground as he has used and then dropped virtually all of them. So the only option remaining here would be to construct his own!

      How many “one-offs” can there be?

  3. MajorFrustration says:

    Am sure you have already thought of some economic themes for your 1st April Blog but have you considered presenting a chronology of the funding expectations of the EFSF since inception allied to what has been raised and distributed todate. Understand that the latest capital amount is E800bn LOLOLOL

    1. Anonymous says:

      Hi Major

      The problem with an April the first update on the Euro Major is how will people tell that it is humour…..?

  4. JW says:

    Hi Shaun
    In a somewhat round-about way Ford’s decision today to invest 1.3BN in a Mexican plant to produce new models for N. America sums up the situation. Globalisation determines the investment of multi-nationals, the only entities with ‘real’ money. Jobs will go in the US, cheaper labour will produce the goods sold the US customers through cheap loans made cheap by QE. And so it goes around.
    The very same people who ‘benefit’ from the cheap loans, pay for them eventually though taxation, they lose jobs, their kids lose jobs. The Mexicans also suffer because their economy continues to only produce low cost labour jobs.
    Who ‘wins’? a very few people who benefit from Ford’s ‘success’.
    Welcome to the continuing development of a stark bi-polar world. 

    1. Anonymous says:

      Hi JW

      The debate over the power of multinationals has gone quiet in the past couple of years but their relative power has risen as governments have weakened. For a start if we look at the UK and US it is larger companies who have cash with Apple being the most famous example. Although we have ZIRP we may well see a “cash is king” phase.

      Japan has been another case of exporting an exporting industry and I await to see how that plays out. It was bad luck for them when Thailand had the floods adding to the 2011 theme of natural disasters affecting Japanese industry. But whilst it retraced a little last week  the Yen appears to be in a weakening phase so it may be watch this space.

      If we stick to the Euro theme the country most vulnerable to multinational power is Ireland.

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