why

Much has been made of the feel good factor that is running through the country as a result of the Olympic Games. Who would have thought this possible in the months leading up to the games with the delays at Heathrow immigration, fears of traffic carnage and the G4 security fiasco being gravely reported by all of the news media?

Now I must admit I did get sucked in to some pre-games worries. When the model for the opening ceremony was revealed a month or so ago, I did fear that a meadow with sheep, a maypole, cricketers and Morris dancers was likely to be underwhelming at best compared to the spectacle of Beijing in 2008. In fact, I made sure I had a stiff drink as well as one hand covering my eyes when the opening ceremony started. How wrong I was! It was engrossing and, to my mind, only spoiled by the hour and a half it took the athletes to come in and Paul McCartney who thankfully came on well past the watershed.

I also decided many months ago that I was going to avoid London while the games were on. Anyone choosing to travel to London in late July and August was a mug, I smugly thought. Well, it looks like I was not the only one who felt this and instead the "idiots" who have visited London have been able to enjoy the city far more than they could ever have dreamt, with tickets to shows and top restaurant reservations readily available and space to walk the streets.

This is an example of why it pays to be contrarian in life as well as investing. When the masses believe something to be true it often pays dividends to do the opposite. But, as one of my colleagues so eloquently put it recently, there is a difference between being contrarian and plain daft!

So how can we differentiate between genuine concern and irrational fear? I recently watched a talk given by David McCandless in which he presented a graph showing the fears that have dominated our thoughts since the year 2000 based on the number of Google searches made. He called the chart "mountains out of molehills".

The first high peak on the graph was the millennium bug with future peaks being provided by SARS, Bird Flu and Swine Flu, with smaller peaks including Asteroid collisions which coincided with the premiere of movies of same, as well as a small peak each Summer when killer bees made an impact. There was a gap in the graph and this was between late Summer 2001 and the end of 2002. His reasoning behind this gap was due to the fact that, for once, we had something genuine to concern ourselves with so other fears were disregarded. I think you could also call it perspective.

This demonstrates that we seem to be wired to need to have something to worry about. The more successful we become as a species the more it appears we fear some disaster coming along that will put us back into the dark ages. We also have a huge media looking to feed these fears whenever they can. Ask yourself, how many pundits prior to the Olympics said everything would run like clockwork?

Now, with the exception of killer bees and asteroids, all of the other fears had an impact on the stockmarket, which in essence is really only a barometer of peoples' confidence. It makes me wonder how many of the fears that we have today will end up on future graphs? Will the financial world end if the Euro breaks up? Will the huge debt burden in the West mean no growth for a decade? More importantly, if we had another 9/11 today, would we still be worried about Greece or Spain leaving the Euro? I doubt it.

For a number of years now I have avoided newspapers and television news at a weekend and have been happier for it. Given the media have, for once, been competing to provide us with good news each day over the last fortnight, It makes me wonder if the general happy feeling is more to do with this as much as the games themselves. Happy news - now wouldn't that be the best legacy we could get from these Olympics!

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

Authorised and regulated by the Financial Services Authority

Steve
Author
Steve Forbes
Managing Director
Alan Steel Asset Management Ltd is authorised and regulated by the Financial Conduct Authority

The Financial Conduct Authority does not regulate tax advice

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.