This week’s note is a little later than usual as I have struggled to decide on a topic – not for a lack of topics to write about, but rather settling on one where I can genuinely add something new or different to the plethora of opinions and domain expertise already covering the most pressing issues of the day, week, or month.
Of course, such concern doesn’t stop everyone from airing their views, whether they’re qualified to offer such an opinion or not. There’s no greater pool - or better example - of unqualified opinion than social media. Mainstream media would, in some cases, appear to be more focused on curating content that attracts attention and draws eyeballs for the benefit of advertisers than articles actually worthy of the description of news, whilst independent journalism and its drive to hold the rich and powerful to account is being undermined by large language models that have been caught red-handed leafing paywalled content. Original thought is even hard to come by in some of America’s preeminent universities, with accusations of plagiarism rocking Harvard’s President, Claudine Gay, resulting in her resignation.
Who controls the narrative, controls how people think. In today’s world the truth is as obfuscated as ever, and determining what to believe in has become an increasingly difficult endeavour. Sam Altman, the founder of Open AI, believes that AI will render human knowledge worthless because tomorrow’s machines will be able to think better and faster than us. We’re already being influenced by AI and as the UK and US head to the ballot box (as well as a number of other countries), we will no doubt hear more on AI and social media’s destabilising influence.
When it comes to financial information, both good and bad news can evoke the same reaction. The more emotional the response is expected to be, the more likely we will see it – or at least that is what we have conditioned ourselves to believe in. The spreading of fear, uncertainty, and doubt (often referred to as “FUD”) has been a well-established tactic of the unseen hand as it targets unsuspecting investors to make detrimental decisions.
As financial participants with many years of experience behind us, we have become well accustomed to the pitfalls associated with the prevailing narrative surrounding our investments. We have developed a healthy level of scepticism on rhetoric that has little balance and created ways to keep emotions in check and stop poor decisions from being made. It is why we place so much stock in knowing what you own and why you own it. When information comes to hand that provokes an emotional response, you come at it from a position of knowledge and therefore strength. We don’t rely on AI but rather our own tuition and understanding that builds an innate sense of intuition, helping us ‘feel’ when something isn’t quite right which we consider a useful tool when navigating an uncertain environment.
This human touch allows us to pick up on the nuances of what is being said, and identify what the prevailing sentiment may be missing when looking at both an opportunity and catastrophe. We have fine-tuned this over the years, and we now consider it a genuine edge that has helped us identify and take advantage of a number of mispricings.
We have no doubt that the war on truth will heat up in the years to come, which is why we spend so much time monitoring our holdings for the first signs of weakness in our investment thesis. It’s unlikely you’ll get everything right, but if you can defend yourself from the FUD then you place yourself in a far stronger position to deliver on your objectives.