economonkey

Eat more lard, say lard makers

May 12th, 2008

Sooner or later, when considering decisions about money, you will come across the Vested Interest. In fact it’s almost impossible to avoid them. A Vested Interest (VI for short) is a person, company or organisation that wants to get its views across in order to somehow influence the people who are reading, watching or listening to them. ‘VI’ may be used to decribe the entity itself or his/her/its viewpoint.

Some VIs are obvious, some less so. I have a VI in writing this article. I’m hoping that if I make it interesting enough, and the information contained within it useful enough, more people will read it and so the traffic to this site will increase and hopefully at some point we’ll be millionnaires. Actually, it would be nice if we could make enough money for a cup of tea once a week, or perhaps cover the hosting fees. So my VI is quite transparent and, I hope, harmless.

But that is rarely the case once you get into the mainstream media. As Piers Morgan and his tipster colleagues at the Daily Mirror proved a few years ago, the temptation to use a position of public influence to push your own agenda can be overwhelming. And it’s not always illegal, either, though one might argue that it should be.

For example, of all the possible investments, the property market is not regulated by the FSA. Any idiot can call themselves a ‘property expert’ and give what is basically unregulated financial advice. And many of them have. Media people are among the most likely to be amateur landlords, so it’s not particularly surprising that the television schedules have been riddled with programmes extolling the virtues of ever-increasing property prices over the last decade. Nor are newspapers immune. The Times, for example, has carried a lot of property advertising, and has columnists who seem to believe that ‘house prices only go up’ - coincidence? Maybe.

Identifying Vested Interests will help you to decide for yourself whether a particular article is truly impartial - or as impartial as it can be - or whether you should treat it as wishful-thinking fiction. The following selections reflect my personal experiences with the media outlets concerned and are opinions only. Your mileage may vary, as they say.

The Daily Telegraph: obviously has it in for the Labour party and will often report with glee on any negative aspect of the economy that can possibly be attributed to Gordon Brown. That said, I’ve found some useful nuggets here, with articles written by people who have at least worked at the financial coal-face and can see through the spin (negative or positive) and crap that is thrown up to disguise the true facts. Among the generic dailies, this is probably my favourite business section.

The Times: whereas once I found its coverage incisive and reasonably impartial, now it often seems to fluctuate between panic-stricken bear warnings and blithe assurances that all is well, in both cases with the barest minimum of research or analysis to back up the conclusions, delivered by people who seem to have only a superficial understanding of economics. A disappointing read, but useful if you like playing ’spot the inconsistency’ from week to week. See above regarding property-obsessed journalists.

The Guardian: doesn’t seem to make much money, if any, from property advertising and so has the occasional refreshing article on the state of that market, though could be considered to be overly-bearish as a result. Bland, largely inoffensive business content for the most part that leans towards the government line, but the occasional gem creeps through as an interview or extract from an upcoming financial book.

The tabloids: good for a laugh, but rarely anything useful for the serious investor.

Television in general: forget it. Any medium that relies on sound-bites and 3-minute features to camera cannot possibly relate the necessary depth required to fully understand what’s going on. If you must invest on the basis of television reporting, use it only as a guide to mass sentiment (though be aware that you might misjudge whether the programme is leading or following opinion). Occasionally a decent feature will slip through the net - the BBC was reporting on mortgage application fraud in 2003, for example, some five years before the FSA even began to act - but it’s not worth the wait. The dedicated financial channels are better, but you have to watch a lot of repeated, regurgitated content before you find anything useful and unique.

Radio: can come up with some surprises, particularly Jeremy Vine on BBC 2 - a long-time skeptic of official inflation figures - and some of the phone-in shows on 5 Live and Radio 4. Check the schedules, pick and choose the more intelligent shows and you may be pleasantly surprised.

The BBC in general: it has, on the whole, been a massive disappointment since the Hutton report, with sound-bite-driven ‘business’ content that wouldn’t trouble a 10-year-old. Embarrassing, party-line drivel and regurgitated press releases from ‘experts’ (i.e. Vested Interests) have made the online business news in particular unreadable for years. However… things change. Over the last year the BBC appears to have found that it still has teeth, and is starting to sharpen them. More thought and research is evident in some of 2008’s articles and a few of the commentators are becoming worth reading / listening to.

The Economist: unashamed cheerleader for globalisation. Some excellent articles - and they called the anglo-saxon house price market a bubble in 2003 - but you won’t find much on the negative effects of free trade here.

The Financial Times: I’m usually impressed. Its VI, if it has one, is so far up the chain that it doesn’t matter for retail investors, and its views are usually quite balanced. That may make them a bit dull at times, but FT Alphaville makes up for that. Thumbs up.

Financial sites such as Motley Fool, Interactive Investor, etc.: these are generally pretty good, but be aware of how such sites make most of their money. You’re unlikely to receive an e-mailed newsletter from one of these companies telling you not to trade because the market’s too volatile. Online brokers make their money through trade commissions, so they have a VI in keeping you trading. That said, they are more likely to call bull or bear without VI, and usually state any existing stakes they may hold.

Discussion Forums: best for VI avoidance. A few may creep in, but are generally identified and flamed to a crisp in short order.

There are, of course, many more sources of financial information available. Often even the VI ones can be useful, but only if you know what the VI is and what it is trying to achieve. In all cases, you should be asking the questions, “Why is this person telling me this?” and “Where is the money coming from?”

Copyright Alex Cruickshank 2008

The author is a natural born cynic.

Entry Filed under: Features