17 February 2017
Fake News, hoaxes, urban myths etc., are nothing new; these stories mislead their readers into believing something that isn’t true is! With the advent of the internet more and more stories are being generated which perhaps is good news for literacy but can make it difficult to uncover facts from the fiction. Unfortunately, whilst literacy rates may have risen, so it would seem is the gullibility of many readers.
This rise in fake news has come more relevant with the latest US elections and the prominence given to it by the 45th President of the United States – Donald Trump. Whilst his policies and pronouncements have given concern and constellation to many – his attacks on so called “fake news” has called many to question what is fact, what are “alternative facts” and what is fiction.
Of course Fake News has no place in financial markets! The motto of the London Stock Exchange since 1801, and for many stockbrokers remains “dictum meum pactum” – my word is my bond. The other maxim which all UK regulated financial firms must also adhere to – or risk regulatory sanctions – is “Fair Clear and Not Misleading” – no room for fake news here! Unfortunately life is never that simple.
Despite having a social media profile outlining my interest and work in financial services and compliance I am regularly targeted by “professionals” wishing to sell me, wine investments, foreign property investments, pension liberations, rare minerals, diamonds, film financing ,anything in fact that looks on the face of it, an “investor” could make a quick return on their investment! To those who have been targeted and have fallen for one of these investment traps you have my full sympathy. These professional fraudsters can “talk the talk” but also unfortunately tend to “walk the walk” with any money they manage to elicit from their victims. They peddle fake news about returns quoting unsourced and uncheckable figures supposedly representing both past and future returns – ignoring that FCA warning that past performance is no guarantee of future returns. Whilst any victim of such fraudsters is unlikely to recover their investment I would urge them to contact ActionFraud with details in order that others might not full victim. I have reported some of the approaches I have received to ActionFraud via their excellent website found at actionfraud.police.uk and also the Financial Conduct Authority who is responsible for regulating financial services within the UK.
Another great source of fake financial news are the numerous investor on-line bulletin boards. Often highlighting unsubstantiated rumours, hearsay or downright lies. Of course everyone is entitled to their opinion on the likely future direction – and share price – of a company, but one must be wary of the motivation behind such story tellers. Those who are making and spreading these views could be accused and charged with market abuse if their motives for doing so are personal financial enrichment. Are they engaged in illegal market abuse strategies – trying to influence the share price either favourable or unfavourable for their own personal gain? Of course a lot of what gets posted on bulletin boards is pure speculation by amateur investors who enjoy a punt often on a small capitalised and traded company which might be a future stock market treasure! However often such treasures turns out to be iron pyrite or “fools gold”. Just keep in mind that age old saying “all that glitters is not gold”. By all means enjoy that punt on such companies but bear in mind that “your capital is at risk”.
With all this fake news around who should an investor place their savings and investments with? Naturally there are a number of factors to consider, how much investment risk is the investor looking to take on (risk attitude), can they afford this investment risk (risk tolerance) and therefore what is their risk appetite. What level of involvement with their investments are they looking to engage with? At CSS Investments our brokers tend to have regular contact with their clients keeping them abreast of market developments and the impact this is having, or may have, on their investments. Brokers are constantly filtering market news determining what in their opinion is flannel – or dare I say it – fake news or perhaps less contentious alternative facts – being spun by a company’s PR team – and what are the potential market impact of the announcements. Is a fall in a particular company’s share price an opportunity to buy – or is it one to sell out at any price? It is this advice and opinion that our advised clients value and whilst our service might be a bit more expensive than an execution only service – most of our clients feel it is money well spent as highlighted in our testimonials page on our website.