Financial bloggers beware

The French financial regulator AMF may end up fining two bloggers (one retired French economics professor and one American investment advisor) who might possibly perhaps maybe hypothetically have influenced financial markets in 2011, when they declared that Societe Generale’s leverage was higher than what the bank officially reported.

This would be a dangerous precedent. Bloggers, financial analysts, journalists and other people are here to independently (or not) analyse news, data and information and express an opinion, whether it is right or wrong. The first question that comes out of this is: could only two bloggers influence markets in such a way? It sounds quite unlikely. Markets are formed by millions of individuals, who can (and do) also come up with their own views. When top-ranked analysts at top banks downgrade companies, markets react negatively, but nowhere near what happened to SocGen at that time (the bank’s share price fell 42% within just 20 days).

SocGen

Moreover, they also have the right to be wrong. If nobody believes them, their opinion won’t matter. In case people do believe them, it might well mean that there is at least some truth in their arguments.

All this once again looks like witch-hunting. No news here. Throughout the crisis, regulators tried to blame hedge funds, speculators, short-selling, rating agencies and other market participants as soon as a country’s credit spread was jumping or the share price of a bank collapsing. A classic case of ‘shoot the messenger’.

The eventual result of this is that information might become scarcer as analysts fear getting sued even if they are actually right. This is evidently the wrong solution. More analyses and opinions the better, as it would reduce the reliance on and impact of a handful of analysts and commentators. We need more competition in financial commentary, not less.

PS: The original links are here and here. The fines are likely to be around EUR10,000. Not too high, but still way too much.

Chart Source: Yahoo Finance

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Marginal REVOLUTION

Small Steps Toward A Much Better World

Dizzynomics

Finding patterns in finance, econ and technology -- probably where there are none

Alt-M

When financial markets spontaneously emerge through voluntary human action

Pumpkin Person

The psychology of horror

Uneasy Money

Commentary on monetary policy in the spirit of R. G. Hawtrey

Spontaneous Finance

When financial markets spontaneously emerge through voluntary human action

ViennaCapitalist

Volatility Is The Energy That Drives Returns

The Insecurity Analyst

When financial markets spontaneously emerge through voluntary human action

Sober Look

When financial markets spontaneously emerge through voluntary human action

Social Democracy for the 21st Century: A Realist Alternative to the Modern Left

When financial markets spontaneously emerge through voluntary human action

EcPoFi - Economics, Politics, Finance

When financial markets spontaneously emerge through voluntary human action

Coppola Comment

When financial markets spontaneously emerge through voluntary human action

Lend Academy

Teaching the World About Peer to Peer Lending

Credit Writedowns

Finance, Economics and Markets

Mises Institute

When financial markets spontaneously emerge through voluntary human action

Paul Krugman

When financial markets spontaneously emerge through voluntary human action

Free exchange

When financial markets spontaneously emerge through voluntary human action

Moneyness

When financial markets spontaneously emerge through voluntary human action

Cafe HayekCafe Hayek - where orders emerge - Article Feed

When financial markets spontaneously emerge through voluntary human action

%d bloggers like this: