While I was standing in line waiting to board a flight to Cape Town early in the morning last week, I was approached by an elderly lady who asked for my help. Her eyes were wide and her voice was cracking with emotion, it was probably the rawness of her emotion that convinced me to step out of the queue to speak to her – her distress was palpable. She told me that she and her husband had read an investment article online that had caused a major disagreement between them. She felt that if her husband followed the opinion in the article, their capital would be eroded by inflation and they would be left financially compromised. She was in real fear for their financial security and asked me to talk some sense into her husband.
What was their fight about?
The husband had read a few articles over the last 12 months that had made him increasingly concerned about the state of his SA investments and the final straw was when he read that he should sell his investments and move to cash for a number of years. The wife had been diligently reading books on investments and commentary from people like Warren Buffett and John Bogle, who universally explained that market timing and relying on predictions was a stupid way to invest and sure to lose you money over time. After listening to their views, I was able to calm the husband down enough to postpone his decision until we could discuss this in more detail. (If you were wondering, I still made my flight to Cape Town.)
This episode caused me to revisit my role and those of other financial commentators in the media. I think there are a few talking heads in South Africa that are causing harm, they do not always realise that people make decisions based on what they hear or read.
Why am I in the social media?
When I write articles in the media and appear on radio or TV, I try to ensure that I provide honest, objective views that are educational to those who might be following me. I believe that some of my views might run contrary to certain preconceived ideas and I try to challenge these with rational views based on respected research or my 20 years of experience advising people about their investments. I also make sure that my content never promotes my personal or business interests and will often avoid certain topics if there might be a conflict of interest. I believe that is why respected financial journalists are happy to talk to me and to publish my articles. This does not mean that my views are always going to be right but hopefully they will be rational and objective.
There is an implicit exchange of value when I make contributions to the financial media, my views will be broadcast to a wide audience which might be positive for my business and in exchange the media house gets quality content (I hope it is quality) for free. It is always my intent that the ultimate beneficiary is the consumer who gains a greater financial perspective from our collective efforts. If contributors and the media do a good job, we hope there is a sustainable business model that will enable us all to make a living. In its best form, this is a win-win scenario for all parties.
Unfortunately, this relationship between media houses, contributors and consumers can also be manipulated by those who have a more narrow self-serving agenda.
Investors can be misled by unscrupulous operators who generate content designed to manipulate people and cause them to act in a way that can cause irreparable harm to their savings.
That is why I am careful to limit my contributions to media houses that have strong editorial policies as I believe the financial media have a duty to provide considered, objective input.
What is going wrong?
As a consumer of financial media, I make a point of reading anything written by certain commentators because I know they have valuable, well-reasoned insights that will add to my knowledge base. I might not always agree with them but I do learn from their input. I also make a point of NOT reading other commentators because I believe they are merely trying to further their own, narrow objectives. In the 1990s, columnist Jane Bryant Quinn called this type of content, financial pornography, nowadays we might call it clickbait. In South Africa, certain media houses are happy to generate any content that will get them reads, viewers or listeners. When advertising revenues are under pressure, anything that will cause controversy or increased levels of fear is potential gold for these media houses and so their editorial policies are purposefully lax. This is one of the reasons that I no longer appear on certain TV channels, printed publications and financial websites.
Even respected publications make mistakes by publishing financial pornography from time to time. In an article written in Fortune Magazine in 1999, a Fortune journalist wrote, “Unfortunately, rational…stories don’t sell magazines, cause hits on websites, or boost Nielsen ratings”. I don’t believe this is completely true.
Moneyweb is one of the few bastions of editorial quality that I would like to be associated with. However, that does not mean that all the views from columnists published in Moneyweb should be believed as gospel. You need to interrogate why these columnists are writing articles in a particular way, do they have an agenda behind their articles? This is especially relevant with articles that are peddling fear or greed. Perhaps the key to publishing content that might cause financial harm to unsuspecting investors, is to provide an opposing view that provides both sides of the argument in one story. In summary, I suggest you read all opinions (including this one) with a critical eye and don’t make big decisions in a rush.