Eating your own dog food isn’t always good for you
Though I admit to hoping the Mirror’s City Slicker James Hipwell gets punished, it’s only to be punished for fitting the stereotype of a loud and brash Loadsamoney. In other words, pure unjustified malice. In reality I find it hard to judge if he did wrong. According to today’s report:
The former Daily Mirror editor Piers Morgan encouraged one of his share tipster columnists, who is on trial for manipulating the stock market, to actively trade in shares, a court was told yesterday.
But is that clearly wrong? Is it possibly wrong? Maybe it’s actually right. The report continues
Asked if Mr Morgan had known he was dealing in shares, James Hipwell told a jury at Southwark crown court: “I was encouraged to do so by him. He used an analogy along the lines of ‘You wouldn’t learn to drive from someone who had never been in a car … if you are in the market, I am quite happy for you to trade.’”
Indeed. Just as you wouldn’t listen to a racing tipster who wouldn’t put money on his own tips. Earlier this year the Racing Posts’s pundit Tom Segal predicted winners ten weeks in a row, supposedly leading to a 6% drop in the profits of bookmakers William Hill. Interviewed at the time he said:
I bet £50 to £100 a race. It’s a bit fraudulent if you’re a tipster and you don’t bet. If you’re having a bad run, you have to be willing to share it with the people who follow your tips.
In software development we call that “eating your own dogfood” — if you don’t use the software you yourself develop, how can you expect anyone else to? (Actually, we often substitute another word for “food”, but you probably guessed that.)
So returning to the City Slickers, is it wrong for a share tipster to trade in shares? No, it’s probably essential. Is it wrong to trade in shares that you’re actually discussing? Arguably it’s even more important to do so. Is it wrong to tip shares because you’ve bought them, and you want to see your investment increase? Absolutely. But can you distinguish between one and the other? Often you can’t.
The point of buying shares you tip is to influence your tipping. But how your buying and your tipping influence each other is often going to be unclear. How to make that distinction clearer is a very tricky problem. Perhaps the answer lies with Tom Segal’s practice of putting your money where your mouth is — but only in small amounts.
