Sunday, 19 August 2018

Who? What? Why?

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SwissInvest strategist Anthony Peters considers ARSE and information overload

WATCHING AND LISTENING to the way every Tom, Dick and Harry has been opining on Greece, Spain and the rest of the eurozone reminded me of a chap called Jon Grant, a very witty Scot who worked in foreign exchange at the long-lamented Irving Trust when I was there flogging bonds in the late 1980s.

When still at Bankers Trust, another defunct but legendary name from the past, Grant used to write a daily page on Reuters (on those little black and green screens – Bloomberg was still very much in its black and orange infancy).

There was a little cabal of writers back then who kept the world entertained but who also assembled from time to time under the guidance of Reuters’ Chris Pizzey and under the collective banner of “ARSE” – the Association of Reuters’ Screen Editors – in order to share long, liquid lunches which could easily stretch until breakfast the following day. I, too, had had the pleasure.

Anyhow, Grant once distinguished himself by spoofing a row of typical Reuters flash headlines roughly as follows – the format will surely be remembered by readers “d’un certain age”:

AAMM Volcker says rates to rise

AAMN  Reagan says rates to fall

AAMO  Volcker repeats rates to rise

AAMP   Reagan repeats rates to fall

AAMQ  Volcker maintains rates to rise

AAMR   Reagan asks “Who’s Volcker?”

The Fed, I might add, was not impressed.

I WAS REMINDED of this because of the endless stream of headlines which flash past us all day with conflicting messages coming from supposedly the same corners.

There are presidents, prime ministers, chancellors, other ministers, members of parliaments (both national and pan-European), central bankers (both national and pan-European), the troika, heads of agencies, sub-heads of agencies, those who think they should be heads of agencies, asset managers, hedge funds managers, journalists and, finally, the likes of myself, who all have an opinion on what is to be done, by whom and by when it should be done … always in the firm belief that whatever it is, it should be paid for by somebody else.

To all that, we can add strong opinions from New York, Washington, Newport Beach, Tokyo, Beijing, New York again and – if he got paid enough – Tony Blair from wherever he happened to be at the time.

In response to the endless flow of conflicting news items and sound bites, European markets go up and down and up again as they swing through the full gamut of emotions and then always seem to end up trading in the general direction of American stocks and bonds, if only because they have no more of an opinion of their own and out of sheer frustration. It’s the old bon-mot: “I used to be indecisive but now I’m not sure.”

Maybe this scatter-gun approach truly is the better way of trading and investing

So, in the way in which we were taught that one aims a rifle but points a shotgun, single stock selection has taken back seat to the broad-brush approach of jumping on and off indices.

However, maybe this scatter-gun approach truly is the better way of trading and investing. Maybe we spend too much time micro-analysing.

Of course, there will be moments when getting the stock right is hugely important – like being overweight Apple but underweight Facebook, to name but one pair trade which would have had the management or the trustees smiling – but at the end of the day, being long the right asset class and then the right currency probably delivers over 90% of the investment performance. Finding the last 10% through stock selection maybe costs more than it is worth.

SO WE FIND ourselves either treating each sound-bite as a policy statement or we disregard everything that is said by those on whom we are supposed to rely to map the path forward.

The fact is that the more people vent their spleens in public, the more it becomes clear that we are no closer to mapping an exit route today than we were a year, or even two years, back.

Are we supposed to treat the candid comments which have been coming out of Helsinki lately as rogue indiscretions, or has it perhaps been agreed amongst the “Northern League” that the Finns and the Dutch will be charged to say in public what the Germans are thinking but can’t say without blowing everything apart?

When I add up the 900 or so messages I receive over Bloomberg on a daily basis – in late August, this drops to around 600 – or I try to follow the scrolling news, I understand what information overload is all about.

I’m sure that young Jon Grant never envisaged anything like this when he wrote his little spoof 25 years ago but clearly he was on to something.

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