A former head of the Reserve Bank made a comment recently that Australians get too much economic data and ‘news’ and this actually worsens the decisions that they make about their investments. Although this comment sounds strange, he is probably right. Particularly over the last decade or two, the public has been bombarded with economic data. From tabloid breakfast news to newspapers and magazines devoted to it, it seems to be continually at the forefront.
Surely this is the same around the world? Actually it is far more pronounced in Australia. The Reserve compared the coverage of bank policy decisions in three countries, Australia, the US and England. It looked at the number of articles in the three days surrounding two successive monthly meetings. There were 35 in the US, 46 in the UK and 131 in Australia. Just looking at “front page news” there was one article for each the US and UK, with 14 in Australia.
With this level of media competition, there is likely to be some sensationalism and also the opportunity for the ‘star commentators’ to make editorial remarks and observations on each miscellaneous news piece, usually well beyond the actual content.
This constant discussion and commentary fuels any client’s uncertainty and increases the likelihood of reacting to noise.