The End Is Near

A belated happy New Year to everyone.

According to the Mayan calendar there should only be a further eleven Informing You's before the world ends on the 21st  of December this year.  As this also happens to be my birthday, I hope Armageddon comes later in the day so I can at least have some birthday cake.  In fact, I may have two pieces as there would be no point in watching my figure.

I mention the Mayan calendar as some people (admittedly a small amount but they do get a vote like you and I) genuinely believe that a measure of recording days developed by a civilisation over 1500 years ago is an accurate predictor of the end of time.  Clearly this is rubbish, but I bet there will be numerous articles and programmes on this as we go through the year.

This reminds me of the headline I read on the front page of the Daily Express sometime in October.  I was at the airport and perusing the newsstand to pass some time when the headline "THOUSANDS TO DIE IN COLDEST WINTER ON RECORD" caught my attention.  I read the first couple of paragraphs and quickly ascertained that the article was basically made up.  Because some long term weather forecast had predicted a worse winter than last year, a journalist spoke to Age Concern who said if that were to happen many thousands of pensioners would literally perish.

How many people read that and worried, as it turns out, unnecessarily?  How many put in an order for winter tyres and bought snow shovels so they would be prepared for the coming ice age?  Well I am unsure of the former, but I know plenty of the latter and I am sure you do too.

Had the forecast been made three years ago I bet it would never have been reported as a story let alone be front page headlines   In 2008 it had been years since we had suffered a bad winter and we were programmed to believe that global warming meant we wouldn't see a snowflake again.  However, after two consecutive bad winters the headline seemed more than plausible.  In fact the last two winters meant that even a sceptic like me had a little part of my brain go "oh!".

It is the same with financial reporting.  As the events of 2007-08 are still fresh in our minds we tend to treat the "end of the world is nigh" headlines as facts, whereas in reality a lot of them are no more factual than the Express headline in October.  What all these articles do is fuel the part of our brain that is desperate for something to worry about.

Technological advances mean that we all have access to information at our fingertips, and I believe the upshot of this is that papers and news media feel the need to sensationalise things to try and remain relevant.  A simple reporting of the facts is not enough, hence the reason why one day in October something which had not happened, and which there was no way of knowing would ever happen, became headline news.

Perhaps something to bear in mind when you read the next "financial Armageddon" story.

Steven Forbes
Managing Director
For and on behalf of Alan Steel Asset Management

Authorised and regulated by the Financial Services Authority

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