Wednesday, 4 February 2009

Straight thinking

For the first time in my career, I am wearing a suit every day. However, as a journalist I hope that the suit does not dilute my indepedence, and I remain free of (excessive) institutional bias.

However, it is all too clear that the role of the journalist in the modern age is often to find out and then report conventional wisdom.

Being the finder of such wisdom leaves the journalist slightly ahead of the curve, often knowing things a few minutes, hours, days or weeks ahead of the public. But often, the only knowledge they are passing on is 'how people will be thinking' rather than the objective truth.

Look at the journalists claiming to have discovered the credit crunch. All they did was do their job - tell the world what the credit market was telling them: the bubble had burst. In July 2007, this was hardly a surprise.

(Not all credit market journalists have the temerity to proclaim that they discovered the credit crunch; but not all credit market journalists have a book they need to flog.)

And as a journalist, your job is find out what people are thinking. This thinking is then reflected in the price of goods and services (directly or indirectly). Hardly surprising that journalists might believe they can tell the future. (Anthropology degrees and discovering that credit is complex hardly amount to substantial insights.)

However, and as with the credit boom, journalists (even Ms Tett) were no better able than anyone else to see the truth, as all they were capable of doing was reporting what everyone else was saying.

If you do not believe me, try being a journalist and telling a story that contradicts the conventional wisdom. Imagine calling the credit crunch in mid-2006 (when all the same factors were at play), or a house price crash in 2004 (ditto).

As John Kay says in his latest book, it is possible to make a lot of money by being aware of the conventional thinking. Either by knowing what the thinking is before anyone else (which is what George Soros does) or by ignoring the flow and arbitraging it (Warren Buffett). However, neither approach makes you a journalist that most companies will employ.

But whatever option taken, never confuse conventional thinking for truth, or imagine that knowing what everyone else knows makes you special. This can get you into a lotta trouble.

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