PERCEPTION v REALITY

 

I am constantly being reminded by my mother that things were so much better years ago. There is more war, terrorism and violence than when she was a nipper. I had tended to believe this without question even though my mother also loves to reminisce about her wonderful schooldays when she had her gasmask in its cardboard box with her constantly, and the fun she had in the air raid shelter never knowing if her home would still be standing when the all clear was given.

 

Now, however, I can tell her that she is wrong. A study has been done and the world is a safer place than has been the case since reliable records began. Furthermore, in the last ten years the number of conflicts in the world as well as deaths due to violence has fallen steeply.

 

How is this possible? Well, apart from the fact that Scotland no longer play England every year at football, it would appear that there are widespread misconceptions as to the level of threat we are all under. The author of the report, Andrew Mack of the University of British Columbia, states that the popular notions that war is becoming more common and deadlier, and that terrorism poses the greatest threat to humanity, are flawed.

 

"Not one of these claims is based on fact," he says. "All are suspect, some are demonstrably false, yet they are widely believed because they reinforce popular assumptions." Why do these assumptions exist? Well the answer/blame as far as I can see lies with the modern media.

 

No longer are they happy to report the facts and allow intelligent people to make up their own mind as to what the event means. Instead we are bombarded with hyperbole and dire warnings. Recently we have seen reports that global warming is increasing significantly (and it's our fault!) but this winter will be one of coldest in recent memory (which, given the difficulty they have in predicting more than a day in advance, I find laughable). A year ago the threat to global economies was deflation. Now they say it is inflation that is the biggest concern, and as if all this wasn't enough we can look forward to 10% of us falling off our perch due to bird flu this winter, even though in the last five years in Asia only 60 people have so far died.

 

Confusing and depressing isn't it. Well, let's try and take an objective view of events.

 

In our opinion, the recent falls that we have seen in the stockmarket are down to no more than a combination of profit taking in the short term, as well as some institutions reducing their exposure in certain sectors such as oil stocks. We see no sign that markets are headed towards Armageddon, but rather we are simply seeing, what is a quite common, October "wobble". Even with recent falls the FTSE 100 index is only back at the level it was 3 months ago and is still up over 8% since the New Year.

 

You could also look at it as an opportunity to invest in the stockmarket at July's prices, but that wouldn't sell any papers, would it?

Steve Forbes

Steve
Author
Steve Forbes
Managing Director
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This letter is the personal view of Steve Forbes. Please check the appropriateness to your individual position with your adviser before taking or refraining from any action.