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Saturday, 9 May 2015

Pesto thickens

Some really poor logic/inherent bias in Robert Peston's analysis of tje election on the BBC website:

There are a few reasons.(for the rapid rise in the FTSE on opening on the day after the Conservative victory)

One (no surprise here) is that Labour's threat of breaking up banks and imposing energy price caps has been lifted. 

Fair enough, although that is only part of the FTSE

Second is that investors have been discounting days and weeks of wrangling after polling day over who would form the government - and so they are semi-euphoric that we already know who's in charge.

The media like the line that uncertainty depresses prices.  It doesn't do that per se. The possibility of bad news will depress prices, but uncertainty should create volatility around the expected price.

Third, many investors tend to be economically conservative and instinctively Conservative.

Well it may be true that investors are politically Conservative, but no investor is going to pay a penny more for a share si,ply because their preferred political party is in power.  What Peston could have said, but didn't, is the perception that The Conservatives treat business better than The Labour Party. But somehow his bias got in the way.

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