It's another year and once again I haven’t managed to watch any of the Oscar nominated movies.
Yet, under the rock I live under, even I managed to hear of the Oscars mixup where at the last minute the host rushed up and declared the wrong Picture had been crowned king. Shocker!
In the Oscars the show must go on no matter what… but I wonder what would have happened if the mistake had been discovered a few minutes later and cooler heads prevailed. Instead of confusion and chaos the curtains would have come down and the next morning the front page of the New York Times would have carried a short, carefully worded apology with all the drama avoided.
That’s what the big investment beasts: Fidelity, BlackRock and others want to avoid at all costs… chaos and drama on their carefully managed stages.
Running around town in my London work I’m lucky I often come across very senior management at the big beast investors – people in charge of deploying trillions of dollars. I was sitting next to one them at a conference the other day chatting about whether we were at the top of the market or not. Stupidly (or courageously) I asked him – so do you take some of your investments to cash if you think there is a high chance of a market crash. He looked at me like I was an idiot and replied “we are the market”. If one of the big beasts advised their clients of a market dip, even if senior managers themselves strongly felt there was one imminent – panic would ensue. They make up such a large part of the market and have such a large influence you would see an Oscar night type of chaos if they make negative statements.
So if you hold accounts at one of the beasts (Fidelity, BlackRock, State Street, Vanguard) you are never going to get a straight answer on what the market is doing. I don’t think it's being unethical – they could actually cause a market crash with the wrongly chosen words.
So what do people like ourselves who have imperfect information do to get a good read on the market – speak to smaller investment managers who have the freedom to move money without “moving” the market. In the case of investing, small may be truly beautiful.