“There's no greater stress than financial stress,’’ said Arianna Huffington Thursday afternoon at the general membership meeting of the Investment Company Institute. Which is one of the fundamental reasons many investors favor mutual funds.
“I want my investing to be boring,’’ the Greek-born author and creative force behind the Huffington Post news and commentary site that is now a part of AOL, aka America Online. “I don't want my investing to be exciting.”
Investing now is a sport, she said, with “constant 24x7 noise,’’ from cable television channels to online blogs. It’s hard for average Americans to keep up with everything traders are saying and reporters are saying.
And maybe they should leave that to fund managers, who are paid to keep up with both noise and fact. Which will make investing appropriately dull for everyday savers.
“A mutual fund does not involve you in that day to day running of your life according to what the stock market is doing,’’ she said. Leaving the driving to a professional fund firm “puts everything into perspective.”
But the chairman and chief executive of the nation’s largest operator of mutual funds, the Vanguard Group, said it’s no longer possible to wholly ignore the 24x7 noise. Or wish for the clock to move back to an age when news came in two chunks: the morning and afternoon newspaper.
"That's not going to happen,’’ F. William McNabb said. Instead, media and advisors have to “step back and frame it.”
“It’s not just about having the facts,” said Gillian Tett, U.S. managing editor for the Financial Times. “It’s having the ability to act as a filter, for it.”
Otherwise, inhaling information and commentary from the Web can be akin to trng to think inside an ““intellectual echo chamber.’’
What mutual fund firms need to understand, in communication, is that Americans are no longer turning to authority figures to get their information.
Tett cited annual studies by Edelman, the public relations firm, which used to indicate that consumers most trusted chief executive officers, financial experts and similar authority figures for the information and insight they got on investing.
Now, she said, there is a “complete loss of trust of institutions.’’ Instead, individuals now increasingly trust “people like me,’’ she said the Edelman studies indicate. People they know and like that are parrying on social media sites as well as bloggers.
Huffington said media covering the financial industry have to be more astute – and predictive. To send out warning signals that there are dangerous products, such as complex swaps, and that a breakdown of financial systems can be forthcoming.
The media need to “provide biopsies, not autopsies,’’ she said. “Media did a bad job of predicting what was going to happen” in 2008, when the credit crisis broke out.
And that needs to change, even as the complexity of financial products and systems increases.
“Complexity tends to be a feature, not a bug, of the system,’’ she said.