Scuttlebutt: an enduring strategy for smart investors - Telegraph

The scuttlebutt aspect of this story is less to do with the actions of a pilot in a hurry but rather with the failure of BA to tell us at any point what was going on; to make any serious attempt to ease our discomfort or let us off the plane; to offer us compensation or even just a proper apology; or to respond to my questions from the plane and since on Twitter.

My attempt to contact BA using social networking shows how scuttlebutt is potentially a much more powerful force in the 21st century than when Fisher and Lynch were using it in the 20th. Getting the low-down on a company you are interested in is a simpler affair today than it used to be when information was more closely managed.

When I was looking to see if BA had bothered to respond to my tweets, I had the opportunity to see what everyone else thought of our flagship carrier. To be fair to BA, while I was not the only one complaining about its service, there were plenty of others describing happy experiences of unexpected upgrades and the like. And therein lies the danger of an over-reliance on extrapolating personal experiences, what might be called first-hand scuttlebutt. I might not feel the same way about the airline, but I would be unwise to make an investment judgment on my experience alone.

The other aspects of scuttlebutt – speaking to a company's suppliers, customers and competitors – remain an essential part of the 360 degree research that proper active management of an investment portfolio involves. In fact it is one of the key differences between active and passive investment and a reason why active funds cost more than trackers. In a globalised market really looking at a company from every angle does not come free.

A colleague of mine has just returned from China where he spent a week trying to discover what was driving commodity prices today. He arrived thinking that a slowdown in China (to rein in the country's inflation) might be bad news for the whole commodities complex and came back with a more nuanced view. The outlook for copper (it's good, there remains a huge housing shortage) is quite different from that for nickel (it's bad, the Chinese have got very good at producing it very cheaply). As the correct, non-bluffing definition on Robert Robinson's show might have read: scuttlebutt – an essential part of an investor's toolkit.

Tom Stevenson is an investment director at Fidelity International. The views expressed are his own. Twitter: @tomstevenson63