Entertaining conspiracy theories can't be good for your investment portfolio. When the facts are tying to tell you something, and you counter that those facts have been baked by someone, then you run a high risk of being wrong.
This observation – painfully obvious to anyone who doesn't entertain conspiracy theories – comes after Jack Welch , the former chief executive of General Electric Co., tweeted that he thought the September jobs numbers from the U.S. Labour Department were "unbelievable," and he didn't use the word to mean "awesome." He suggested that the White House manipulated the numbers to help Barack Obama's re-election compaign.
A number of prominent observers have already shot down the notion. Paul Krugman said: "For the record, it's ridiculous to imagine that the Obama administration could arrange (on short notice, no less) to cook the jobs numbers. The sheer logistics would be impossible, plus these are civil servants who have to live under both parties."
And via the Wall Street Journal comes this view from Keith Hall, former Commissioner of the Bureau of Labour Statistics until recently: "There's nothing wrong with the numbers," he said. "The only issue is the interpretation of the numbers. The numbers are what they are."
The thing is, the jobs report isn't the only fact that conspiracy theorists like to dispute. Mention low inflation as a reason to shy away from say, gold, and some people will jump on you for putting any faith in the government-generated consumer price index.
Making a bet that inflation will rise from the current low level is one thing, but disregarding inflation readings is another: If the facts catch up with you, you could be caught holding an inappropriate investment.
It is amazing how far conspiracies can go, though. As Mr. Krugman noted, crazy theories have followed Bill Clinton and Hillary Clinton, and the theories sometimes found their way into the mainstream.
They might even affect more local concerns, such as real estate. My friend Garry Marr pointed out that the Toronto Real Estate Board has been scrambling to put a positive spin on the slide in monthly transactions: While transactions fell 21 per cent in September over last year, TREB has decided to account for the fact that there were fewer working days during the month, and on a "working-day basis" transactions fell just 12.5 per cent.
As Mr. Marr noted: "This will only make the conspiratorially minded angrier – most of them convinced that the so-called benchmark indices produced by organized real estate are covering up a major decline."