The term “fake news” has entrenched itself in our daily vernacular. Sadly, there was a time the only fake news I came across were stories sent to my by my sister from The Onion, a well-known news satire site. In the aftermath of the U.S presidential election, though, “fake news” has taken on a life of its own. It has reached a point where Snopes.com has become one of my regular research sites.
The implications of fake news for investors is especially significant. As such, investors need to be aware of the sources of investment stories that may spur then to invest in a particular company of financial instrument.
AAII Weekly Survey Question
To get an idea of how serious a threat our readers see fake news when it comes to making investment decisions, we asked the following question:
How serious do you believe threats of fakes news impacting your ability to make investment decisions is?
Here are the results:
In all, 1,952 readers voted as of Monday morning, May 22.
This was one of the few times I have posed a question without having some idea of how the votes would skew.
As it turned out, the majority of our readers to not think fakes news poses a threat to their ability to make investment decisions, with 30% viewing fake news as a not very serious threat and another 29% saying fake news is not serious at all.
In all, 36% of respondents do think that fake news does pose a threat when it comes to making investment decisions. One-quarter of voters said fake news is a serious threat why 11% believe fake news is a very serious threat to making investment decisions.
Only 4% of voters were not sure as to the threat fake news poses to making investment decisions.
Weekly Special Question
Not believing fake news is a threat to making investment decisions and protecting yourself from fake news, however, are very different considerations. Even though it turns out that most of our readers to not feel fake news threatens their ability to make investment decisions, I was still curious to see how people protect themselves from falling prey to fake news.. Everyone’s situation is different when it comes to estate planning. Some set up a plan to ensure the financial future of a spouse or minor children. Others do so to avoid probate or minimize the impact of taxes.
With this in mind, last week’s special question asked the following:
What steps, if any, do you take to ensure the credibility of the financial news you consume?
In all, 251 readers replied to the question.
Several recurring themes emerged from the responses, and here they are (ranked in order by the number of responses):
- Use only “trusted” news sources (some of the sources cited were AAII. Bloomberg, Morningstar, and The Wall Street Journal)
- Check multiple sources to verify the validity of the news
- Do additional research before acting on a news item
- Ignore “fad” stories or investments
- Be more skeptical of news stories and read them more carefully
Here is a sample of the responses:
- “Check multiple sources using sites that have different (and if possible opposite) points of view. Make sure that I am acting rationally not just reacting to the news.”
- “My investment decisions are for the long term so not driven by hot ‘news’.”
- “I only consume financial news from sources I trust.”
- “Think about it after reading it. Does it make sense, does it have logical consistency, does it have gaps, is it fundamentally believable?”
- “Be patient. Pay attention but do not panic. All will be known with time.”
- “View/listen to many sources to get a balanced view.”
- “Common sense, of which there seems to be a shortage of these days.”
Everybody has an opinion! Why not give us yours? Participate in our weekly member poll, updated every Monday, and see the results online at http://www.aaii.com/memberquestion.