It is an annual event that comes with the regularity of Thanksgiving and holiday shopping. I am referring to the Black Friday survey that the National Retail Federation conducts every year, in their misguided attempt to forecast holiday sales.

As we discussed a few weeks ago, the National Retail Federation Black Friday survey is nonsense. Money in the bank, a sure thing, a can’t miss bet, it has been wildly wrong each and every year.

Once again, in 2013, they did not disappoint. As the most recent data shows, they got it wrong. Again. And not only in magnitude, but in direction as well. The most charitable comment I can make is that they did not miss as wildly as they have in prior years. The mathematician in me wants to point out that the merely poor – as opposed to awful – results could have been the result of randomness. Given the NRF’s past track record, even if they nailed to the second decimal place, I would be compelled to chalk it up to dumb luck.

But this column is not about me beating my chest, telling you I was right. Hell, who really cares that the National Retail Federation got Black Friday wrong for the 10th consecutive year. For anyone on the opposite side of the trade with the NRF, that has become a given.

Since its Friday, I’d rather wax philosophical about headspace and intellectual approach rather than focus on the details of any one monthly retail sales report. Let us discuss information sources, methodologies, and precisely the choices we choose to make when we select what to believe.

This is a much more significant point than many investors and traders realize.

 

 Continues here

Category: Investing, Psychology

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.

3 Responses to “What Kinds of Errors Are You Making (and what are you doing to fix them?)”

  1. ilsm says:

    Skipped the gym today, and eating like I doubled my aerobics……………….

  2. RW says:

    To riff on ilsm, there are trade-offs:

    1. I’m not devoted to exercise but enjoy eating, don’t care much for dieting and always gain too much weight in winter so I walk 2-3 miles every morning — when you have a river path and a dog this is easier even when the weather sucks — and work out at the gym or bicycle/ocillate alternate days; either avoid the calories or don’t and vind a way to burn them.

    2. Both mathematically/logically and psychologically I don’t like losing money — don’t mind blowing it for fun and for others — but hate seeing it evaporate and couldn’t seem to stop myself from fiddling with assets or bailing out at less-than-optimal points. Wound up constructing two entirely separate portfolios with the larger one strictly controlled (annual rebalancing based on a preditermined algorhythm). The smaller ‘tactical’ portfolio is active and I can do what I want with it including even make a profit now and then; it’s “money I can afford to lose” and while I still don’t like losing it I can engage in more detached analysis and hold a bet when its called for.

    Moral I guess being if you can’t or won’t alter your behavior then find a constructive way to either compensate for it and/or make it profitable. “I yam what I yam and that’s all that I yam” as Popeye avers but there are angles there just like (most) everything else. I still miss a day at the gym now and then — can’t miss a walk, the pup wouldn’t approve — and I still pull a dumb stunt in my active portfolio — including distrusting a market so much I “willingly” pay an opportunity cost by not investing enough in it as its rising — but I’m working on it.

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