Connect with us

Business

Finance: Take financial opinions with a pinch of salt

Legacy Phuket Gazette

Published

 on 

PHUKET: It’s very easy to get confused in the era of 24-hour media with regards to what’s going on in the world economy. To make matters worse financial opinions are often reported as facts. Many times there are hidden agendas behind these, so it’s important to take any opinions with a grain of salt.

The idea for this article came to me as I was sitting with a client, and we were discussing probable scenarios for China. If you have followed the narratives out of research departments of the major financial institutions and talking heads on financial news channels, you know that not so long ago the Chinese government was considered to be this cash-rich-behemoth with a mountain of cash that could destroy the US dollar if they ever decided to dump their cash holdings.

Now, this narrative suited them greatly while they were all recommending emerging market funds – the public was piling in. Yet, suddenly, the narrative changed and China was leveraged to the hilt. The public pulled out of Chinese stocks and other emerging markets as well. I am not saying it is a conspiracy, but there have been studies on this strange phenomenon.

If you look back at the covers of financial magazines during the peaks and troughs of major market cycles, a pattern emerges, and it is not the one logic would have you expect. Just before every crash, there are rosy predictions of the futures of the day’s high flying companies and usually the economy as a whole.

Similarly the bottoms are formed very often while pundits write about how this time is different and the sky is imminently falling. Of course, there are these kinds of opinions often during the middle of cycles, but they tend to be very extreme around tops and bottoms.

Now the main reason you need to be aware of this is because every so often Wall Street comes out about a specific company and starts making a very compelling argument about why it is a great addition to your portfolio. They are often trying to unload shares from their own positions. Of course, there is meant to be no communication between trading and research departments, but let’s not kid ourselves here. It is highly likely any opinion you receive from Wall Street has an ulterior motive behind it.

Knowing this is half the battle. It allows you to filter out all of the opinions being presented as facts and look for empirical data yourself. Economic numbers have an importance if you learn to understand them. However, the commentary around their release may lead you to make a false conclusion.

Similar to this is earnings data and moves in share prices. If you learn to understand the data itself, you can ignore the pundits and analyze the numbers within a framework that you understand. This could be the fundamental analysis for investing, technical analysis for trading, or maybe some econometric model to adjust weightings for portfolio management, if you are a little more advanced.

Whatever you do, knee jerk reactions are generally a bad thing when it comes to your financial affairs. Have a plan and stick to it regardless of what some super guru on CNBC says. He is likely ‘talking his position’ – an industry term which means trying to generate market-moving-pressure that benefits something he already holds himself.

Never accept an opinion as fact and remember no one has a crystal ball that predicts the future.

David Mayes, MBA, resides in Phuket and provides wealth management services to expatriates around the globe, focusing on UK pension transfers. He can be reached at david.m@faramond.com or 085-335 8573. Faramond UK is regulated by the FCA and provides advice on pensions and taxation.

— David Mayes

 

Get more from The Thaiger

📱 Download our app on Android or iOS
👋 Have your say on our Thailand forums
🔔 Subscribe to our daily email newsletter
📺 Subscribe / Join YouTube for daily shows
👍 Like/Follow us on Facebook
🐦 FOLLOW us on Twitter
📷 FOLLOW us on Instagram

image

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

News37 mins ago

USA tentatively plans to require all foreign visitors to be vaccinated

Thailand55 mins ago

Bangkok closure order extended until August 31

Best of1 hour ago

Ayutthaya’s 5 most amazing hotels

Sponsored1 day ago

Tour Phuket’s Islands with 5 Star Marine

Welcome back to Thailand!

Thaiger is getting behind local businesses for the restart of tourism in Thailand - up to 50% discounts across all advertising packages!

Coronavirus (Covid-19)2 hours ago

Nonthaburi field hospital adds an ICU

Coronavirus Vaccines2 hours ago

Older volunteers wanted for trials of Chulalongkorn University mRNA vaccine

Crime2 hours ago

Officers surprise drug suspect with birthday cake in Nakhon Si Thammarat

image
Join the conversation on the Thaiger Talk forums today!
Coronavirus Vaccines2 hours ago

WHO calls for booster shots to be suspended while poor countries face vaccine shortages

Myanmar2 hours ago

Rumours of meeting with Aung San Suu Kyi as Burmese military accept ASEAN envoy

Best of3 hours ago

Top 10 Hemp-Friendly Restaurants In Thailand

Coronavirus (Covid-19)3 hours ago

Waste disposal firm calls for rubbish collectors to be vaccinated

Coronavirus (Covid-19)3 hours ago

Thursday Covid Update: High of 20,920 new cases and 160 deaths

Coronavirus (Covid-19)4 hours ago

Rollout of Pfizer doses gets underway

Coronavirus (Covid-19)10 hours ago

20 year old arrested for online alternative vaccine scam

Coronavirus (Covid-19)14 hours ago

Delta variant now the predominant strain, 78% of Thai infections

Coronavirus (Covid-19)16 hours ago

Controversial food delivery only rule faces criticism

Thailand5 months ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism5 months ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket5 months ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism5 months ago

Phuket Thai food treats you need to try | VIDEO

Thailand5 months ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism5 months ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand7 months ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand7 months ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand7 months ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand7 months ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand7 months ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand7 months ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand7 months ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand7 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Thailand7 months ago

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8

Trending