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How ‘fake news’ can impact your portfolio

Daily newspaper

In an age where some online media can be deliberately deceptive, investors need to apply more critical thinking than ever before.

‘Fake news’ is a term that gets thrown around a lot these days, especially by the US president Donald Trump.

But the real definition is not articles that have genuine mistakes or an opinion with which the reader disagrees, but a disturbing new trend where digital media companies are actively disseminating information they know to be false, for financial or political reasons.

News articles have long been a source of quality information for investors, who have sought to make informed investment decisions off the back of economic or political developments that affect markets, companies or sectors.

But with the advent of fake news, investors need to be especially careful, no longer able to rely on something just because it says the word news on the masthead and looks legitimate.

This is the view of fund manager Raj Shant, a portfolio manager at Newton Investment Management, which is part of the BNY Mellon group.

In an analysis article published by Investor Daily, Mr Shant argued that fake news – along with that other favourite term of Mr Trump, alternative facts – pose a threat to retail investors.

“Today, there is a proliferation of information, a good portion of which is unreliable,” Mr Shant said.

“We believe this increases the premium on trustworthy and quality providers of information, and on those who can interpret it.

“Fake news and alternative facts may be a very modern development in the battle for eyes and ears, but when it comes to investing, we believe the tried and tested methods of analysis still stand the test of time.”

The onus is now on investors to ensure they are verifying information and cross-checking facts, Mr Shant said, adding that social media can create “echo chambers” where investors are not getting access to balanced information.

Governments in Europe have proposed potentially cracking down on fake news operators. It remains to be seen whether similar legislative moves could occur Down Under, but in the meantime it’s best that investors apply critical thinking to all information and keep in mind that not all online media content is created with good intentions. 

How ‘fake news’ can impact your portfolio
Daily newspaper
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