Many years ago, when I was a poor and humble graduate student, I taught the prep course for students taking the GMATs and LSATs. I understood the internal logic and game theory needed to succeed on standardized tests, and could explain techniques used to do well on them.

One of the keys to succeeding on these tests was to have strong reading comprehension skills. Toward that end, I taught what I like to call active reading. It required the reader to approach text in a rigorous and logical way, challenging each sentence to find assumptions, false statements and deductive errors. Think of it as logical skepticism.

I still use these muscles everyday. I can randomly pick up any newspaper article or analyst report, and find holes and flaws merely by asking questions the author left unanswered. Active reading often leads to the conclusion that the vast majority of news is at best incomplete and uninformative, while a majority of research reports are full of biases and logical errors.

That is a pretty bold statement, and to demonstrate this, I am going to take a random article and dissect it using logical skepticism. When I am finished, you will have a better understanding of why I often say “Lose the News.” I hope you never look at media noise in the same way.

Yesterday, an article decided to take stock of investors’ concerns, quoting many strategists and managers. I chose it because it was well-written and researched, and offered the perspectives of many strategists. However, this exercise can be done with any article or research piece written by anyone anywhere.

Continues here

 

 

 

Category: Data Analysis, Investing, Markets, Really, really bad calls

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.

5 Responses to “A Data Junkie Looks at the News”

  1. scottsabol says:

    Barry,

    As a member of the media (meteorologist), the incomplete nature of news has become very frustrating. Media has changed a great deal over the last 10 years to a more “info-tainment” type product. Each news story is written as a quick narrative that fits the viewers preconceived notions. Some say that’s what sells now and this is what the viewer wants. I say this is an excellent example of double confirmation bias. The network feeds the viewer/reader with information that is biased or incomplete. The viewer eats it up. They feel good and come back for more. This feeds the network confirmation bias machine further. Its a vicious cycle. What’s worse is that most people have no idea this is going on. When you try to explain it, they get uncomfortable and defensive. Its hard to teach active reading if people don’t want to step out of their comfort zone.

    Scott Sabol

    • VennData says:

      The Fairness Doctrine was renoved and we got Rush Limbaugh, Joe Kernan, and Rick Santelli.

    • DeDude says:

      I have given up on network news exactly because it is so full of useless infotainment. I get my world news mostly from BBC where the commercial pressures are less and there still is some real journalism. In addition sites like this where Berry gives links to informative articles can help cut through the clutter and find good articles on the internet. My biggest frustration is with local news where the networks and newspapers are still the only places and where the commercial pressures have lowered the quality to an almost unbearable level.

  2. VennData says:

    Adam Parker, Morgan Stanley’s chief U.S. stock strategist was bearish at the start and all the way through the 2013 30%-plus gain of the S&P500.

    People want narratives. This blog Vox, etc are giving mathematical rigor a shot.

    You get your economic philosophy from a book of Ayn Rand fiction you are hurting yourself. But when you vote you’re hurting me and the country giving us idiots like Reagan and Bush.

  3. faulkner says:

    Great article. If I may summarize:

    Ignore Attributions: E.g. “investors are getting nervous,” “investors concerned,” “For our clients.”

    Evaluate the Source: Track record on area under comment

    Define the Context: Market, Historical

    Make Comparisons: What to what? Quantify. Within market/historical norms or not?

    Test Evaluative Assertions: “stocks are expensive,” “dominated by hedge funds,” “No. 1 concern”

    Test Correlations: Counter-example, Seek possible alternatives, Statistical probability