Towards a new investor guidance index
Since the earlier Slogpost today about Bloomberg trying to rubbish the idea of China as a basket case, my post-cognitive senses have been running riot: the world and his mother has been saying the same thing all morning – the anchors at CNN, the French Airbus boss, and the usual American suspects on Twitter to name but five. And as with all things bourse-bollocks, it’s having the desired effect: despite the PBOC spending another slush-pile of money on the Shanghai, it only just managed to hold steady….but most of the rest of the world markets were back in the blue today.
“It’s all about confidence” is what we hear over and over again, which is I suppose a mantra opinion-formers like Bell Pottinger and the US Fed use to help them sleep at nights. But I am rapidly coming round to the view that we need a new index to guide those I would call the Thinking Innocent among us.
Every last sector, market, issue and emotion these days seems to have an index, but there is no index measuring bollocks, bullshit, moonshine, or indeed “news” in general. There are media sites bringing facts to bear on the drivel put out by Rupert and the Teletubbie Twins after the event, but none of the active market movers read it – either because it doesn’t suit them too, and/or it tends to reveal the Truth – and/or because it’s affiliated to the Guardian, which nobody reads much thee days anyway.
I would suggest that what we need is a Truth index, except that for about 3.7 million reasons consensus would be impossible, and you could guarantee that within 3 weeks the Establishment version would come out to counterbalance it.
“You would say that”
Humphrey Bogart was I think the first actor (while playing Sam Spade) to popularise the idea of a conflict of interest between claim and personal interest. I’ve decided that there is a major insight in this for those trading in today’s bonkers world: a world that Bogey couldn’t have foreseen – but, having been told about it, would’ve laughed his socks off. (Multiple usage of the word ‘cocksucker’ would almost certainly have been involved).
This is my hypothesis: there is certain to be a dissonance between what somebody running, supporting or just working for a commercially involved institution tells us about the outlook in its connected markets, and the reality. The percentage of that dissonance will depend on how immediate and damaging that reality is.
I realise that this next bit is arbitrary rather than scientific, but on the other hand it is based on a very solid base of empirical experience spanning four decades. My proposal is that – in order to achieve a practical level of actionable use of the index – we should assume that the dissonance is highly like to be between 80 and 100%. As examples to make the point, I would cite the utterances of Mario Draghi, David Cameron, Antonis Samaras, Wolfgang Schauble, Tim Yeo, Fred Goodwin, George Osborne, Rupert Murdoch, Jamie Dimon, Lloyd Blankfein, Jean-Claude Juncker, and everyone in the senior echelons of Deutsche Bank, HBOS, Microsoft, G4S, Bank of America, Libor, Gold trackers, HSBC, the Chinese Communist Party and every tobacco or alcohol provider on Earth. Plus almost everyone else, but I don’t have the space here to honour everyone.
The Flim-Flam Index
Once established, the Flim-Flam Index (FFI) is going to leverage the power of the small investor as never before. Its full title –
The fibs-lies-interest conflict-mendacity-false-lame-answers monitor
– will soon be forgotten in favour of a simplified 5-point measurement of the FFI scale: 8, 8.5, 9, 9.5 and 10.
It is conceivable that, when analysing the statements of Bob Diamond, Boris Johnson, Michael Fallon, Hillary Clinton, Barack Obama, the Italian Statistical Office and the Argentinian Central Bank, we may need to expand beyond the 10 point mark. We shall simply have to assess as we go along whether flim-flam about the past and the present is apparent during any given statement.
Further, one might have to devise a special index for the US Fed – the working title for which I suggest should be the Flip-Flop Index – to monitor first the inability to take a decision, and then the speed with which it is reversed once taken.
Finally, in order to seal a place in history I propose to leave in my Will The Slog Bursary, donated to a prominent but plonky business school (preferably Harvard) for the future study of whether Bears are more likely to flip-flop, and Bulls more prone to flim-flam, or vice-versa, or neither, or both.