The Expert Opinion

Most people now realise (I hope) that the world of finance is not a science. Science has principles, or rules if you like, that, in a given set of circumstances, will always be obeyed: there is no choice. If we compare with chemistry, for example, when I mix A and B and I will get C. Clearly from what we are told, and let me assure you what we are told is only the very tip of the iceberg, in the heady world of finance there are no such principles. This absence of a basis to explain what happens leads to different rationales being put forward. The problem this gives for the individual media is that it means they have to give their stories some degree of validity. They do this by putting words within quotation marks.

Where do these words come from? ‘The Experts’. These people have been multiplying at an exponential rate over many years. The growth has been fed by the insatiable appetite of the media for opinions to authenticate what they are saying, to fill the column inches, and the necessity to find some way to occupy all the time available to 24-hour television news channels. In fact ‘Expert’ is now a profession in itself.

So, what’s the problem? Well, with most of the ‘Expert’ opinions we are force-fed today we have no idea who the people are, or how they are qualified to give an opinion on this topic.

No matter what happens in the world, disasters natural and unnatural, so called celebrities acting normal or abnormal, sports results or forecasts, it seems it is always possible to find an ‘Expert’ who is more than willing to give their opinion (for a fee of course). Nothing wrong with that you might say, everyone is entitled to his or her opinion, especially in the so-called democracies. The problem is however that although introduced as someone to give their expert opinion on a topic, what they say and the way they say it starts to make it sound like the words are etched in stone and handed down from on high. Of course they sometimes preface what they say with words like, “in my opinion … ” or “it’s too early to say because we don’t have the facts, however … ”, but what follows is anything but a humble opinion. In most cases this has no direct consequences for the receiver, but when it comes to ‘The Financial Expert’ (often given the title ‘Economist’), what is said can almost be described as dangerous.

‘Dangerous’, isn’t that a bit dramatic? I don’t think so. In my opinion (not an expert one) most situations on which ‘The Financial Expert’ comments are made worse by that opinion.

Let me give you a simple example. Here’s something we hear every day (more than once) on the television news:

Newsreader:   “The DOW has fallen by two percent today. Joe Smith of Smith Investments Associates, what are the implications of this significant fall?”

Joe Smith:    Well Fred. I would say this is more than significant; it is catastrophic for the Market. But this is only the start. The Dow will fall another one percent”.

Take a closer look at what happened in this brief exchange:

– had any of the viewers heard of Smith Associates before? Probably not, but they trust the TV channel to have selected someone who knows what he is talking about, and has an independent opinion (???).

– ‘The Expert’ gave his opinion (without mentioning the word) with eyes looking straight into camera, and the sincere expression learned at the school for experts.

The consequences of this little exchange? People get scared and start to sell shares, leading to the Dow falling by … a further one percent! Result? ‘The Expert’ thinks he got it right; the news media think they chose the right expert; ‘The Expert’ will be asked to give an opinion in the future (for a larger fee!)

This is only one small example. Multiply this by the number of news media and you quickly see that we are more than knee deep in ‘Experts’. As I said, it’s become a profession, but not one that I would particularly recommend to people. What are the job requirements? The ability to make the most mundane and obvious observation sound profound and intelligent (the technical term for this is ‘talking torro merde’); good looks and the ability to change facial expression from doom and gloom to optimism and cheer in a short time (for television); have a list of standard excuses ready for when your opinions turn out to be wrong (you need a long list because this will happen most of the time); knowledge? well, yes, but it could be a hindrance.

Two things always intrigue me.

Firstly, how can two ‘Experts’ in the same media have completely opposite opinions, even though these opinions may be separated by only a short space of time (in the case of television, sometimes a matter of minutes!)? Why do none of the moderators point this out to them?

Secondly, why aren’t these ‘Experts’ questioned when they get it wrong? Could it be that everyone knows we will only hear the same old excuses? “The situation is dynamic, and subject to continuous change” – most people knew this before, except it seems ‘The Expert’.

A final thought. There is one thing that is always true in the world of finance, therefore it’s a fact: when someone wins, someone loses. Who are the people who are winning – could it be ‘The Experts’?

So, do we need all these people giving opinions? No – and that’s my expert opinion.

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