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Don’t let fake news (or the Deep State) take your money…

I sat down this morning with a particular goal in mind.

I wondered whether I could successfully parody much of the sensationalist rubbish that passes for news and opinion.

Alas, dear Fool… I’m not that clever, or that funny.

Or, thankfully, that paranoid.

You know the stuff I’m talking about, right?

The Social Media 101 playbook, where you make some extreme claims — on the left or the right — and rally your supporters to you.

It’s a pretty effective play in a world where communication is free and you can get to a large number of people thanks to likes, shares and retweets.

Step 1: Make up something that you can rally ‘your’ team against. Ideally, prey on existing fears

Step 2: Claim your opponents are behind it. For bonus points, call it a conspiracy.

Step 3: Tell your followers that said crisis can only be stopped by people like them, using ideas like yours

Rinse and repeat.

The great thing is that you don’t even need to convince a great percentage of people who read your message. It’s a big world, and just a tiny sliver of it will deliver you the votes, money and/or power you seek.

You might call it weaponised prejudice.

Sometimes, it’s the true nutbags who just get lucky. Other times, it’s carefully crafted by smart manipulators who are just trying to find a way to mobilise a crowd.

Frankly, I’m not sure which is worse.

What does all this have to do with investing, I hear you ask?

Unfortunately, a lot.

Because the very same thing happens here, too.

Step 1: Find a pre-existing view

Step 2: Add confirming ‘evidence’ and opinion

Step 3: Offer a solution — your solution, of course.

Step 4: Profit

Every salesperson knows that trying to change a potential customer’s mind is hard. 

Far, far better to find out what they already think, and go with it: “Oh, sir, that suit fits you wonderfully” gets the sale.

It’s why the doom-and-gloom brigade never stop.

Maybe they truly believe the world is going to end.

This time.

Unlike the last 30 years when they were saying the same thing, but nothing happened.

Or maybe it’s just good for business:

Find someone who’s already nervous. Hit them with more reasons to worry.

Then give them a solution. Yes, your solution.

Forget balance. Forget nuance. Forget detail.

We’ve seen it in politics now for years.

Three word slogans win. Fear sells. Pessimism sounds smart.

The same is true in investing.

I’m reminded of an episode of the wonderful tv program, The West Wing. Here’s an exchange from one episode, a presidential debate (courtesy of IMDB):


Moderator : Governor Ritchie, many economists have stated that the tax cut, which is the centrepiece of your economic agenda, could actually harm the economy. Is now really the time to cut taxes?

Governor Robert Ritchie, R-FL : You bet it is. We need to cut taxes for one reason – the American people know how to spend their money better than the federal government does.

Moderator : Mr. President, your rebuttal.

President Josiah “Jed” Bartlet : There it is. That’s the ten word answer my staff’s been looking for for two weeks. There it is. Ten-word answers can kill you in political campaigns. They’re the tip of the sword. Here’s my question: What are the next ten words of your answer? Your taxes are too high? So are mine. Give me the next ten words. How are we going to do it? Give me ten after that, I’ll drop out of the race right now. Every once in a while… every once in a while, there’s a day with an absolute right and an absolute wrong, but those days almost always include body counts. Other than that, there aren’t very many unnuanced moments in leading a country that’s way too big for ten words. I’m the President of the United States, not the President of the people who agree with me. And by the way, if the left has a problem with that, they should vote for somebody else.


Now, I don’t want to get into the tax cut question. At least not until I become Treasurer (no, that’s not going to happen any time soon — neither party has the stomach for what actually needs to be done, so I’d never get the position).

Instead, it’s that line: “What are the next ten words of your answer?”

And neatly followed up with “Every once in a while… every once in a while, there’s a day with an absolute right and an absolute wrong, but those days almost always include body counts”

It’s perhaps the question we should ask, every time we see or hear a ‘talking head’ — particularly one with something to sell — give their view on the economy, or the market, or a particular stock.

The management gurus at Toyota have a different version of the same thing. Called ‘The Five Whys”, it’s an exercise that requires you to keep asking “why?” when an answer is given. Once you’ve drilled down 5 times, you’re probably pretty close (or at least much closer) to the real answer.

You reckon it’s smart to be fearful as an investor? Why? 

You reckon gold is the answer? Why?

Your broker or advisor agrees with you? Why?

Here at The Motley Fool, we’re not into three word slogans.

Probably to our detriment, honestly.

It’d be easier just to play the same game everyone else is — appeal to our readers’ base instincts, throw in a little confirmation bias, and take their money, right?

Easier, yes. But the right thing to do?

For better or worse, instead of just telling you what you want to hear, I write articles like these a few times each week.

Sometimes, you’ll agree. Sometimes you’ll disagree. Other times, you may well want to throw something at the computer (or throw your phone) because of what I have to say.

But you’ll always get it straight. Because I just don’t know any other way.

The first 10 words?

“Stock markets are volatile, but have always increased over time”

The next 10?

“No-one knows when booms and busts will start — or end”

The next 10?

“Accordingly, trying to “time the market” is almost certainly fruitless”

The next 10?

“Democratic capitalism — though flawed — will likely keep delivering economic growth”

The next 10?

“If that’s all — likely — true, optimism is smarter than pessimism”

I trust you get my point.

No slogans there. No boosterism or conspiracy theories. 

We have an optimistic view of the world. One that believes in human potential. Not in some airy-fairy way, but in a ‘given a chance, people naturally create better products and better solutions’ kinda way.

No, we don’t think it’s perfect. But it’s pretty bloody good. History shows us that.

My bet is that most of our readers are ‘What are the next 10 words?’ kinda people.

But it can be hard in a world of soundbites and 24/7 media cycles, not to mention Presidential tweets and constant speculation.

Which is where we come in. It’s why we write these articles.

To remind you of the evidence. Of the history. Of the power of optimism, rooted deeply in reality.

Stock markets, historically, have increased around 9 – 10% per annum, on average, over more than a century.

Three word slogans? Nah, I can do it in two: Investing works.

Fool on!

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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