There’s an old adage that states that ‘bad news sells’. Behavioural science shows us that we are more interested in shocking stories that evoke certain emotions within us. Think about some of the headlines that you have consumed over the last few days – whether via television, print or radio. Invariably it will be negative in nature. Understanding this fact within investment markets can be a powerful tool to keep us all on track.
The collapse of Crypto exchange FTX has dominated financial news flows in recent weeks. As we have stated before, it is interesting (no doubt several books and a movie are in the works) but not of huge concern to investors outside of the Crypto world. Putting this debacle to one side big investment news stories has been somewhat thin on the ground in the last quarter of 2022. Economic data and central bank rhetoric has been broadly constructive and there hasn’t been a huge amount (relatively speaking) to talk about.
So, if we take the converse of the opening statement what should we expect? If bad news sells, good news doesn’t; and therefore, if news flow has been subdued markets must be quietly going about their business. Indeed, equities are up over 7% and bonds over 3% since the end of September, which means multi-asset fund investors are (whisper it quietly) in better shape than they were two months ago.
As always, if you wish to discuss anything in this newsletter in further detail, please do get in touch.