Trump’s weak-spot has been exposed over the weekend. Confronted with photographic evidence that his Inauguration was not as well attended as his predecessor’s, he set his press team to work creating alternative facts. The American dictionary Webster tweeted the definition of “fact”
Alternative fact presumably presents an alternative reality, a subjective reality, the world as seen by Donald J Trump. If this is the way information is presented to the American people, I suspect the American people will eventually get tired of it. For now, they are split between those who are wanting to believe and those who don’t.
The comfort of easy solutions
This reteat from objective reality is of course not unique to Donald Trump. The Investment Association has indulged in alternative facts for some time now, most notably when they likened hidden charges to the Loch Ness Monster. This made for a good headline.
Over the weekend, I wrote about a pop at the FT from Citywire’s Editor
The FT article expressed surprise that he vast majority of people investing throught the Hargreaves Lansdowne platform use active managers.
I responded with what I think is a rational explanation. Putting aside the “fact” that most of the fund choices in the Hargreaves Lansdowne (hot) 100 are active, people are chooing active management because of alternative facts (eg because they choose to say the world in a different way).
People like to think they can pick a winner (the basis of betting) and they like to have someone or thing to blame if things go wrong. There is no fun in passive investing, no winners or losers , no heroes or vilains. People choose active funds because they want to believe in different.
The damage that active management does is relatively benign, other than pernicious scams, it simply relieves the wealthy of some wealth, a sort of haircut for their vanity.
The alternative Donald
Trump is different in a more difficult way, he has us believe that a wall can stop illegal immigration, that global warming is a myth and that more people attended his Inauguration than his predecessors. Of all the outrageous quotes appearing on CNN, the one in which Spicer told the press
“this is what you should be reporting”
was perhaps the most desperate.
Trump wants America to see things through his eyes, I would call this sinister if it wasn’t evidently ludicrous. But I fear that Trump will hurt the most vulnerable hardest. He is a scammer who targets those with least- because they are most vulnerable. Like any scammer, he has his victims believe he is on their side.
Behavioural economics can only get you so far
The fundamental belief in something because people choose to believe in it, is the falsity of religion, Trump uses religious platitudes to avoid having to explain things rationally. People who follow religion because of the comfort of being in a righteous crowd, need to be more careful
Active management can argue for its own existence on the same basis. That people choose active funds on Hargreaves’ Lansdowne’s platform proves that they are useful. They are useful, Placebos are useful and a willing press (prepared to re-print alternative facts) are useful.
But the lies (for that is what alternative facts actually are) can only work for so long. Eventually the placebo will wear off, people will get tired of backing losers, Trump will be called to account and found wanting.
What is the appropriate response till then?
Good humour I think.
It seems to be how Soros and Buffet and the other financial sages are accepting Trump’s nonsense. Over the centuries there have been many mountebanks selling phoney solutions, they have come, we have gawped, they have been found out and we have felt chastened that we could have been so gullible.
Have your Trump, have your active management. I’ll stick with inactive management (including inactive managers like Terry Smith). I’ll stick with the Obamas and remember Trump’s inauguration for them.
I’ll remember another remarkable sermon from Leslie Griffiths and its title “REPENT”.
