Fake news is now better understood, but it is only part of the investment problem. Much mainstream journalism - no matter how well intentioned and researched - has bias. Attracting attention matters, as does filling a set amount of space. Most traditional media, for example, were slow to recognise the warning signs in the build-up to the great financial crisis. However, a few unconventional news sources did spot the dangers.
Good practice is to identify some additional news sources that could signal change. Certainly, there are investment gurus who attempt this, but their own commercial necessity to deliver regular content and appear knowledgeable can undermine their originality. Useful sources need not be costly. The best ones attract a lot of informed feedback that adds value. But avoid commentators who are being contrarian simply for the sake of it. There are many professional doomsters who - like the stopped clock - are occasionally right, usually wrong, and not at all useful.
What investors need are rare insights, and forced exposure to some unconventional thinking. Developing a good risk framework involves exploring all the possible scenarios. False comfort can come from relying on the officially-prescribed risk modelling that focuses on past market sell-offs.
In general, newspapers report surprise and concern – never business as usual or steady growth. In terms of alternative sources, there are some good free newsletters from investors and others who are close to politicians and central banks. I like Bill Blain’s newsletter which he emails a summary of each day and a link to his website. There are some other newsletters from recognised investment professionals that I regularly read. The Wall Street Journal Daily Shot is an interesting summary of graphs; most of it is available for free as the Daily Shot Brief. Another source that was helpful in the run-up to the financial crisis, was Naked Capitalism. It attracts some good writing and often there is good feedback in the comments. The most helpful contrarian sources are likely to focus on the finance sector – noting stresses in banks and lending.
It is too easy to let our comfort zone determine what we give attention to: good investment practice needs challenge. Balancing news sources, by including unconventional views, can help spot major changes.