Private investors have fallen for Labour’s promises – and made a costly mistake

Political promises should be taken with a pinch of salt. Investors can make expensive mistakes if they change their plans around a pie-in-the-sky manifesto pledge.

Take, for example, Labour’s promise to privatise a handful of companies. Many DIY investors took these seriously and sold out, avoiding the risk of any government meddling.

On the face of it, this is sensible. However, professional investors have held their nerve and this causes a problem. It it these investors who control the vast majority of the market and baked into their decision-making is the very low probability of a Labour majority government.

This means that while DIY investors have fled, share prices have generally risen as…