``Let’s be clear: the work of science has nothing whatever to do with consensus. Consensus is the business of politics. Science, on the contrary, requires only one investigator who happens to be right, which means that he or she has results that are verifiable by reference to the real world. In science consensus is irrelevant. What is relevant is reproducible results. The greatest scientists in history are great precisely because they broke with the consensus.”-Michael Crichton
SINCE we got engaged into this endeavor, we realize of the indispensable function of information in determining our investing decisions. Yet, faced with the availability of a multitude of information in the cyberspace, our role is to ascertain the electrical engineering equivalent concept of “signal-to-noise” ratio or to distinguish the “level of desired signal” from “the level of background noise”.
In the investing sphere NOT all information are created equal. For instance, information disseminated in mainstream media signifies public knowledge; where the likelihood is that such published information has been reflected into the prices of the underlying securities or of the markets reported. Hence, the implications of the data presented are less likely to have a significant impact on the pricing UNLESS of course, if it comes with a “dramatic surprise”.
In my case, examining the relevance of the data or theory presented and its potential ramifications, its timeliness, the manner of which it was presented or the “framing” process, the “implied” biases reflected by its author and/or the publishing entity, aside from their credibility or reputation and most importantly the latent motivation or incentive for such article.
Remember, for the conventional news outfits, it is SELLING the news which counts more than simply conveying the information. Why do you think controversies or sensationalism mainly hug the headlines (whether it is your favorite broadsheet or prime TV news station)? Is it not there to catch your attention?
And since the business of mainstream media is to sell news, then it is quite obvious that the current or du jour “sentiments” underpin most of their articles. What you may believe as “reality” are most likely present fashions or trends and may yet be susceptible to change, whether it is comes from the Fox, CNBC, CNN, the USA Today or the New York Times, Manila Bulletin or Philippine Daily Inquirer.
Take for example, market Guru Jim Rogers’ experience. When interviewed in mainstream media in the late 1990s where he predicted the revival of the commodities and the China investing themes, his ideas were simply shrugged off and dismissed as “...anchors were still giggling with glee still advising to buy more dot-com shares.” Now, of course, everyone knows what happened next.
My own experience post 9/11 “day of infamy”, was when the PRO-war sentiment has dominated the airspace, your analyst, by taking the usual contrarian stand, joined the war debate by taking his conviction, a letter of rejoinder to a pro-war columnist in Businessworld. The financial genius columnist quoted me verbatim, albeit anonymously, in his column and promptly rebutted my arguments. I was no match against his eloquence though. But 6 years from the war, it is a wonder how media’s “reality” or sentiment has radically changed.
Another example was from last week, where we pointed to the inconsistencies of the article underscored by a “bias” quoted from an expert who was incidentally an authority from a top government bank. While the articles’ prominence, given by its frontpage treatment, could likely be indicative of the snowballing trend towards national awareness of the Philippine capital markets, the banker’s “risk-free” suggestion of their products lack the perspective of the risks provided for by eroding purchasing power via inflation. So aside from popular sentiment, you have “biased” opinions pervading mainstream media.
In short, news from mainstream media represents MOSTLY consensus thinking. And consensus opinions have proven to be glaringly wrong especially during major inflection points of any trend be it scientific, social, political or financial trends.
Let me quote Elliott Wave’s Alan Hall who enumerates past scientific “reality” by the consensus:
``Some ideas accepted by popular consensus that are now rejected:
-The flat earth
-Geocentrism
-The harmlessness of tobacco
-The link between electromagnetic fields and cancer
-The benefits and harmlessness of leaded gasoline additives, followed closely by
-The benefits and harmlessness of MTBE gasoline additives
-Nuclear Winter
-Y2K”
And that’s the reason why contrarian analysts utilize so-called “Magazine cover indicators” to discover misguided but deeply entrenched popular beliefs and promptly bet against them.
Finally, mainstream media could also suspiciously serve as conduits for politically veiled agendas. For example, as in the war in Iraq, mainstream media seems ever so obsessed with the potential menace of H5N1 (whose pandemic reach is something we DO NOT DISCOUNT).
However based on present facts (of course such dynamics could change), the death toll from malaria, according to the World Bank, is about a million a year or 3,000 children a day far exceeds that of the much feared H5N1 virus.
While we certainly are NOT qualified to offer expert opinion on such matters, we quoted this previously from risk communications expert Peter Sandman (which continues to haunt us), ``The basic reality is the risks that scare people and the risks that kill people are very different...When hazard is high and outrage is low, people underreact, and when hazard is low and outrage is high, they overreact”.
Lately Mr. Sandman provides for more explicit examples of such media covered hazard-outrage asymmetries (emphasis mine), ``As for high-hazard, low-outrage risks — smoking, driving without a seatbelt, obesity, and the like — media coverage tends to be scanty and dutiful. These are the stories that are simultaneously too serious to sensationalize and too boring to cover straight. They’re the black hole of risk reporting.
``There are certainly times when the media sensationalize serious risks, especially in “docudramas.” But in news, sensationalism is most common in stories with no serious implications for public health. “Flesh-eating disease” gets sensationalized; terrorism usually doesn’t.”
This leads us anew to question on the present dynamics...
While it is true that Malaria appears to be confined to low income countries while the H5N1 virus has pandemic potentials, could it be that the world has instead been overreacting to a “fear-imposed outrage”? Or could it be that such “sensationalized outrage” have been utilized as justification for more government “carte blanche” intervention?
And you can look elsewhere for the application of such mainstream media promoted popular consensus themes...
As German Philosopher Oswald Spengler once wrote (emphasis mine), ``The press today is an army with carefully organized weapons, the journalists its officers, the readers its soldiers. But, as in every army, the soldier obeys blindly, and the war aims and operating plans change without his knowledge. The reader neither knows nor is supposed to know the purposes for which he is used and the role he is to play. There is no more appalling caricature of freedom of thought. Formerly no one was allowed to think freely; now it is permitted, but no one is capable of it anymore. Now people want to think only what they are supposed to want to think, and this they consider freedom.”
That’s why I don’t ask you to just trust me, read diverse “non-mainstream” opinions for your intellectual freedom.
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