In order to check or verify whether the financial crisis is over (on Wall Street) one might listen to worlds’ most influential investors, like Warren Buffet. Or shouldn’t one do so in this case?
The problem that I have with information that comes from the US is the high amount of “sales” and “marketing” in the content. Now I know that it is very hard to be objective, but in the financial world, it is sometimes nice-to-have a solid and objective opinion from a guru. More in a situation where it is hard to find rational and objective data that will tell what the status really is.
Someone I would normally trust is a guru like Warren Buffet. The man has become rich and famous because of his investment approach. He is one of the richest men. As he is still leading a large investment fund, he should probably know.
“The worst of the crisis in Wall Street is over,” Buffett said today on Bloomberg Television (1).
Now this really worries me.
I’ll try to explain.
When I listen to information from the US I tend to subtract a percentage of what I would call “marketing noise” or “sales bias” from the message. I know the US culture is sales oriented most visible in “the American dream” where everything is possible. But as a European I’m often more skeptic about things.
Perhaps the best example of such a sales biased message was pronounced by The president of the US to start the War on Iraq. More simpler examples are available too. But on average I would call the sales bias an inclination towards an over-optimism in the best of senses and without judging this phenomenon.
But from the other side of the Ocean, my skepticism remains. Especially on this topic: the stock market. not because of my interest in it, but much more, because I think to know more about this market than about the situation in IRAQ and the Middle-East. To put it differently. If someone would had asked me back than in 2003: do you believe that IRAQ had mass destructive weapons? I would probably had answered, most likely not, but I’m not sure.
If someone now asks me: is the financial crisis over, I would probably say (write): it probably is not. The worst is yet to come.
The financial world is too complex to analyze so we often support our action on gurus and advisers and their opinions.
In this case, on the financial market, i do not quite trust the opinion of Warren Buffet. I fear that he is just saying this not to further upset the market. In a sense, there is nothing wrong with that. If people and leaders start to express negative opinions on the financial market it would become a self-fulfilling prophecy. “A bear-market is only just around the corner.”
That doesn’t mean that the other way is more promising: if one of the most famous investors claims that “the worst is behind us,” I think we have to prepare ourselves for some more problems.
The core of the problem is credibility. The credit crisis has been provoked because of the same “sales culture,” where people are sold loans “because it would be a problem.” Now the same banks and investors try to comfort us “that the worst is over.”
Yeah, I believe you.