OPINION: The success story they won’t tell you

There is a takeover bid in the offing for Close Brothers, an investment bank that has prospered by the simple expedient of providing an umbrella under which bright people develop their own business ideas.

Close takes a majority stake in these, but there is enough equity left for the entrepreneurial management to get rich, too.

The flashy and the fashionable elements of the financial markets tend to be avoided, but the spread of activities is nevertheless wide enough for something always to be doing well, so that individual ups and downs are absorbed and the overall business is stable. Dividends and profits have been on a steady upward trend for years. Everybody is happy, or should be.

But as a letter to the Financial Times pointed out this week, although the stock market says Close is just the kind of company it likes, the reality is rather different. ‘It is a cruel fact that the market does not appreciate cautious companies that churn out higher dividends year on year,’ the author says. ‘It seems to prefer the jagged graph of companies with shorter-term higher growth punctuated by occasional disasters and management blood on the boardroom carpet.’

Economic and financial market theory says this is nonsense, but anyone who has studied the stock market would know the author is right. The glitzy, the mercurial and the hyped always prove more seductive than the staid, the consistent and the respectable. It is another example of the triumph of form over substance – generations of painfully developed theory usurped by a bit of skilled PR.

It is certainly tempting to blame the communications sector for this. It is the PR industry – aided by a compliant and insufficiently sceptical press – that does so much to position the high-fliers in the public mind by creating a sense of excitement and keeping the fires stoked. Why does it not do a similar job and persuade the public to buy in to the old-fashioned virtues?

That, surely, is the nub of it. Society gets the newspapers and the PR it deserves. The industry’s practitioners deal in the art of the possible – they may be able to shape the public’s views, but only if they work with what is already there. It goes beyond the role of both to demolish existing beliefs and rebuild from scratch.

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