What’s News - And How Much Is Views?

Amid all the talk about currency exchange rates, banks going under and Joe Public having a rough time of it, many of the experts trip over themselves to tell you what’s going on.  One website where this is evident is Fleet Street Invest.  Even though this is a UK website it does touch on all the issues affecting many countries around the world at the moment.  You can see the latest headlines and opinions by visiting http://www.fleetstreetinvest.co.uk.

But one thing that many of these websites have in common is experts, pundits and people who will give you their undivided opinion on the current situation.  And this is where you need to be careful.  It’s understandable that many people in the business of writing about financial matters will want to talk about what could happen next, but it is easy to get this mixed up with the facts of the matter.

That’s why this article is titled as such.  How do you know whether what you are reading is actually news or not? 

Some people have said that the fear of a recession can trigger the event itself.  It’s virtually impossible to prove this of course, but it can be something of a self fulfilling prophecy in certain ways.  For example, let’s say you run your own business.  This involves buying stock to sell on to your customers. 

Now let’s suppose you visit ten websites a day that tell you all about various news matters.  One day you read an opinion piece that tells you there is a recession on the way.  How likely are you to pay attention to it?  You might give it some thought but it won’t affect your day - or your actions - very much.

But supposing you take a look at those ten websites a few days later and every single one of them is foretelling a recession?  It hasn’t actually happened yet, even though things might look a bit wobbly regarding the economy.  But if you read all the doom and gloom your brain will start to take it in.  You might even take a look at the stock you have and decide not to order any more in at the moment.

And that will have a knock on effect on your suppliers, who rely on orders from businesses like yours to keep going.  And before you know it, everyone is struggling.

There is no doubt that we do all react to the various news stories that hit the headlines each day.  If the currency exchange rate suffers in a big way, we might think about putting a hold on that foreign holiday we had planned.  If another bank admits that it’s in trouble, we might even draw out our money before it goes down the tubes.

But we need to be aware of whether we are reading news or views.  Some articles start off as news stories and then move on to being opinion pieces - and it’s these articles that can create confusion.  You could be reading about a recession that you aren’t even experiencing yet.

The best course of action here is to pay careful attention to the information you read.  Kneejerk reactions to specific events can cause more harm than good - especially if those events haven’t even happened yet.  There’s no reason why you shouldn’t read opinion pieces and forecasts on what might happen: you just need to make sure you know whether you are reading news or views.

In the end a downturn in the economy is caused by more practical reasons, not by mere opinion.  But there is no doubt that a mass panic could make things worse as people react to what could happen, as well as what is happening right now.

Take the uncertainty over several banks for example.  As soon as uncertainty over a bank’s position hits, everyone wants to remove their savings ‘just to be on the safe side’.  And of course, that leads to the bank getting into even more trouble as we have already seen.

So be careful what you read - especially in the current situation.  There is no doubt that the credit crunch is hitting everyone now.  But the only way we can really find out what happens next is to wait and see.