click for updated futures
10.24.13 futes
Source: Bloomberg

 

 

Yesterday morning I wrote Look Out Below, I Don’t Know Why Edition. Today, the market half is a mirror image — up about as much as yesterday was down. The only thing that remains the same is my ignorance — I really don’t know why markets are up today or down yesterday.

One headline notes that “U.S. Stock Futures Rise Amid Earnings, China Factory Data” — but we had mixed earnings yesterday, and so far, earnings are mixed  today. And Chinese economic data was good yesterday. This leads to my regularly offering up my insight with a big fat I don’t know.

All too often, investors try to construct a plausible explanation, typically in narrative form, as to what is going on. The danger is not so much that they fail — that to be expected — but rather that they confuse their confabulated narrative for truth, and mistakenly believe their own bullshit for reality.

This leads to a combination of ill informed decisions making which cannot help but produce poor judgements.

Rather than focus on what is unknown, and perhaps unknowable, I would counsel investors to focus on techniques that eliminate the noise to focus on signal. Eliminating known errors is a good start, as is reducing the consumption of frivolous, consistently wrong, or merely useless junk.

How can you get more signal, and less noise in your day? There are ways to accomplish this, which I hope to detail tomorrow . . .

Category: Cognitive Foibles, Investing, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

2 Responses to “Look Out Above, I Dont Know Why Edition (part II)”

  1. ironman says:

    More signal, less noise, and to be honest, we don’t care much about day-to-day fluctuations unless they’re 2% moves or larger.

  2. [...] promised yesterday, our subject this morning — indeed, over the past few months — is how to reduce the [...]