Fake news is not NEW. It has been used for hundreds of years to mislead or mid-direct in times of war, crisis and when big money is on the line. It's just that there is so much news in todays media rich world, it is hard to know who is telling the truth in any given moment. Everyone has an agenda. Whether it be a CEO, investor, hedge fund, public health official, governor, news channel or president. Everyone has something to gain or lose in a given situation and to whatever degree it is serving someone's personal, business or institutions goals or ambitions, bending the truth to telling outright lies will depend on how much is at stake and how willing someone is to cross ethical or moral lines.
As an investor, it is important to pay attention and ask the hard questions when reflecting on what any particular source of information is saying about a company or market. What is being said, by whom and why are matter of fact questions to be asked. These questions along with a discerning perspective can save you money and make you money, stop you from making rash decisions and help you stay rational.
Below are just a couple of examples to illustrate these points. We could provide many more. These examples are high profile examples of what we are referring to.
On March 13th, 2020 Warren Buffet said that he was not selling airline stocks, even laughing at the suggestion. By May 3rd, he announced that he had sold Berkshire Hathaway's entire positions in all airline stocks. Had he already decided on March 13th that he was going to be selling airline stocks? Perhaps Not. Perhaps Yes. Perhaps, he was thinking about it on March 13th but either way, he was not going to be saying anything along those lines. Instead he laughed it off as if it were preposterous. So while it may have been factually true at the time that he was not selling airline stocks, his comments and mannerisms could be construed as an intentional mis-direction, knowing that it was likely he was going to be selling the airline stocks sometime soon. We cannot know with certaintly if this was the case, but the proximity in timing with selling their entire airline stakes appears intentionally strategic. When there are hundreds of millions of dollars at stake, stay alert.
Earlier this year, Senator Kelly Loefller coincendently with the congress investigating the threat that the Coronavirus might cause, sold millions of dollars of stock, while simultaneously releasing statements about the strength of the American economy and complimenting the President on his response. Were both responses separate acts of doing both her financial and political duty or connected. Regardless, the ethics of such actions are thin on the ground.
Unscrupulous Banks, Traders, Investors will tread a fine line when big money is at stake, to serve their own interests.
The lending crisis leading up to the great recession of 2007 was fuelled by lax lending practices, cheap money and massive consumer demand. There was no way the banks did not know this was going to end badly. It was going to end badly by design.
Are markets and stocks today reflecting the severe economic realities induced by the coronavirus? Is is fake optimism, real optimism or just mis-informed optimism? Regardless, it is up to the investor to discern among the thousands of daily data points and points of view being expressed in the media. As we have mentioned in previous blog-posts, there are many unknowns and caution is in order until some of these unknowns become less known.
Finding trustable news and information sources may be one of the most challenging feats for any investor. Discerning between good, bad and suspicious news makes you a more savvy investor and cool-headed in the face of crisis.