Your Money: Nic Cicutti

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The Independent Culture
Here comes the bribe: when fund managers fly financial journalists off to exotic locations, they expect a good write-up

ONLY A fortnight ago, I wrote briefly on my views for the prospects of UK and world stock-markets. I was - and am - what might be called a "bear", believing that a sharp correction was likely, indeed imminent. The Footsie plunged on Thursday by a further 180 points, so perhaps enough has been said on this subject. But there is a related question that needs to be answered: do we, as personal finance journalists, always give the right information to you, the reader?

Early last year, a fund management company invited a group of journalists on an all-expenses-paid trip to Russia to see for themselves the prospects for that country's growth. Needless to say, the journey was motivated by the launch of a fund specialising in Eastern European markets. The Independent, which has a policy of not accepting this type of "hospitality", did not go.

The assembled scribes returned full of enthusiasm for what they had seen and duly filed for their respective newspapers about the coming Russian "economic miracle" and how there were superb buying opportunities out there. Anyone who read more than one paper or "serious" magazine in the weeks that followed would have been amazed at the sudden appearance of so many articles on the same subject and at the consensus that emerged among my colleagues.

Today, the Russian economy heads towards meltdown, with shares in the former Soviet Union worth a quarter of their high point a year or so ago. Its woes have infected the rest of the world's stock-markets.

Strangely, this is not the first time such trips have been closely followed by disaster. A few years earlier, I recall a bevy of journalists (is that the right term?) who were flown out by another fund manager to Latin America, this time to check out that region's economic prospects. Again, the launch of a specialist Latin American fund was the spur for the trip.

One writer who went told me later that the visit involved a series of hops around the area, with brief interviews with self-styled experts in a number of Latin American countries. Such was the condensed and dizzying nature of each leg that some journalists became confused as to what country they were in. The journalists came home and wrote generous articles on the prospects for that market, which then duly collapsed.

What purpose do these flying visits really serve? It is often said that they are meant to be "fact-finding missions". How one succeeds in this aim when the journey usually involves a frenetic bout of meetings with individuals who are always bullish about the prospects for that region's economy (and, let's be honest, an equally frenetic bout of after-hours drinking) is beyond me. There are plenty of experts here in London who can talk intelligently about the economy of any country. Fund managers in certain regions have been known to come over here, too: they can easily tell us what is happening on their patch. And no matter how technologically inept journalists can be, even I know how to use the phone.

The truth is that these trips are a bribe. Although the journalists are almost all honourable people and would not willingly mislead their readers, fund managers know that there is no better way of guaranteeing that something will be written about than to drag us around the world on a jaunt. We end up writing not about what really matters but ill digested, and possibly misinformed, copy. Our pages become tainted, which makes it difficult for you to trust us.

That is why you won't ever read about my brief visits abroad - they won't happen. For my part, I have decided that if I read any journalist's comments about a country, which he or she visited courtesy of a fund manager, I will automatically expect shares to do badly immediately afterwards, and have nothing to do with that region.

As world stock-markets head down the plug-hole, that's probably as good an investment strategy as any.