Thursday, 12 February 2009

Market whispers

I have the seen the enemy and now I know its name.

It is called training for financial journalism and it tells young, impressionable journalists that there is a simple reason for all market movements and the journalist must, under severe time pressure, say what this is at the top of the story.

Hence bollocks.

The generalist journalist has no idea why the market moved 0.5% so grabs in the drawer of that week's ideas and trends and sticks it onto the story.

"FTSE 100 drops as economic fears rise," they write, relieved to have found something.

The reader, relieved at the outbreak of certainty, knows little of the spurious reasoning - maybe an analyst friend has said something, or it is the journalist's pet belief - behind the 'cause'.

In this way, false beliefs build in the market as these 'reasons' are repeated back and forth by people - journalists, analysts, CEOs - who have no reason to question them, and each with vested interests in repeating them.

So it goes.

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