What's the difference between a plane crash and a market crash?

Apparently, you're only allowed to learn lessons from the first one!

Consider this: Where else, other than finance, is history and past performance not considered a relevant guide to the future?

Let's see now. Medicine? Well, way back before Greek austerity was allegedly about to knacker the global economy - presumably through a devastating olive drought - an ancient physician named Galen believed the liver circulated blood. Let's all be happy we learned from trial and error and put that performance to the right organ.

How about cooking? Past attempts showed us which fruits and berries we could eat without perishing, who the tastiest animals were and the perks of pasta.

Maths, English, Business Management, mobile communications, forest fires, plane crashes, biotechnology, manufacturing, and sending shuttles into space. Folks, we're supposed to learn from past endeavours, look for the rights and wrongs, identify the cycles and move forward….

….and yet, for some reason in finance we're told not to do that.

You see, in finance they've legislated that the past may not serve as a guide to future performance. Why? Because the investment 'axis of evil' - politicians, regulators and the media - have made it so.

It's less about what makes sense for the masses, and more about what makes money for the few.

There's so much good stuff to be learned out there, like the value of spotting market cycles, of ignoring the investor herd, of knowing that even Albert Einstein said man's greatest invention was compound interest!

Jings, chances are if you invest with Warren Buffett or folks like Neil Woodford you'll likely have a better retirement than you will by keeping your money in a deposit account.

Yet every day, every hour, every minute, the talking heads bang out emotive criticism without checking the facts, using the type of negativity and scare tactics that worry people and stops them from investing.

And in doing so they're providing advice to the viewer audience - that's a big 'no-no', by the way - but the regulators do not intervene.

Instead they hoard compliance as their ally, saying the past shall not be an indicator for the future, and keep us from learning every positive and painful cyclical lesson that happens in every market system on the planet.

A lot of years ago, while Gordon Brown was Chancellor of the Exchequer, I sat in the House of Parliament with then Chairman of the Commons Treasury Select Committee, John McFall.

The conversation focused on what had gone wrong with things like Equitable Life - I was the whistleblower on that fiasco - and the disaster of Split Caps. He wanted to know the right questions to ask to get to the bottom of things, and more importantly, what the answers to those questions would mean.

John was eager to encourage people to save for the future. And so I gave him these three pieces of advice; stop the Government from interfering with financial legislation, when you make a promise keep it, and sack Gordon Brown.

Mr Brown became Chancellor of the Exchequer on 2nd May 1997. He set about reforming Britain's monetary and fiscal policy architecture, replaced Tony Blair as Prime Minister on 27th June 2007 and resigned on 11th May 2010.

During his time in office he also shepherded Britain into the greatest recession of the modern era.

So what's the difference between a plane crash and a market crash?

It's what you learn to do differently in the aftermath.

Alan Steel

This letter is the personal view of Alan Steel. Please check the appropriateness to your individual position with your adviser before taking or refraining from any action.