Posts filed under “Philosophy”

Once again, with feeling:

The most over-analyzed, over-emphasized, least-understood data point of the month comes out today. I guess we could probably add “over-traded” to that list.

Why do am I critical of how we discuss this point?

Consider these reasons:

1) The overall trend in hiring is what matters, not a single snapshot

2) In a Labor Force of 140,000,000 people, the change in net monthly hires minus fires is a miniscule one tenth of one percent. (i.e., 140k out of 140m)

3) If you use the correct long term hiring cycles, you cans get a pretty good estimate of likely hiring patterns. Following credit crises, we should expect a mediocre but improving job creation.

4) The overall NFP number is subject to heavy revisions as new data becomes available; hence, the preliminary number is unreliable.

5) Like all models, the BLS model is flawed, but not useless. That is why we prefer to look at the overall trend versus any specific datapoint (That also eliminates the Recency Effect).

6) While Hiring is a lagging indicator, we can look at the 3 leading components each month to see if we are improving or backsliding: Hours Worked, Wages, Temp Help.

Okay, let’s take a quick look at the numbers:

Consensus estimates for Payrolls are to see gains of 146,000 workers versus December’s +103,000 (Bloomberg survey). The economists also expect the jobless rate to rise one tick to 9.5%.


BLS data released at 8:30am

Category: Data Analysis, Employment, Philosophy

QOTD: Data vs Theory

Here is today’s extended version of our QOTD” “[George Bernard Shaw] once said that as he grew older, he became less and less interested in theory, more and more interested in information… Nothing is so hard to come by as a new and interesting fact. Nothing is so easy on the feet as a generalization….Read More

Category: Data Analysis, Philosophy

Naive Science and the Nature of Financial Markets

The post was originally published at The Financial Philosopher.

It’s quite true what philosophy says, that life must be understood backwards.  But one then forgets the other principle, that it must be lived forwards.  A principle which, the more one thinks it through, precisely leads to the conclusion that life in time can never be properly understood, just because no moment can acquire the complete stillness needed to orient oneself backward. ~ Soren Kierkegaard

Man is a perpetual naive scientist: Formal scientific methodologies generally involve Describing, Explaining, Predicting and Controlling, which are all extensions of everyday human behavior.  The naivety in this regard, as associated with financial markets, is financial market participants believe that by describing and explaining the past with empirical evidence, they will be given the capacity to predict and control the future.

Additionally, this empirical evidence is often compiled haplessly and contained within a certain bias to a desired result.  Although completely within in the bounds of human nature, this naivety is surely among the greatest of man’s arrogance and foolish behavior.  This is not to say that science is required for financial success but rather a suggestion that a good scientist is almost always preferable to a bad one.

Describing and explaining is integral to understanding or, at a minimum, a means of satisfying simple curiosity; and predicting is often perilous but can be done prudently; however the controlling aspect is almost always tragic.  Because man is so engulfed with the desire for knowledge (of things past and of things future) there is no ability to see himself as he is now.

Faced with the choice between changing one’s mind and proving there is no need to do so, almost everyone gets busy on the proof. ~ John Kenneth Galbraith

Last week’s 662-page Financial Crisis Inquiry Report, for example, is almost useless; however it is one of the only predictable aspects of the entire financial crisis: Humans, to satisfy their desire for control and for narcissistic display of knowledge, will perpetually look to the past and wonder how things could have gone so wrong, then will proceed to rationalizing the event into a means of controlling (preventing) a similar event in the future.

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Category: Philosophy, Psychology

Why Blog?

The latest spasm careening through the blogosphere tangentially referred to a minor rev share offer from Seeking Alpha, one of the major blog aggregators.  We saw the usual hand wringing discussions of “blogonomics,” as well as an article discussing the challenges of blogging (its hard). Pretty much, most missed the point (though props to Abnormal…Read More

Category: Philosophy, Weblogs

A Few Thoughts on Steve Jobs / Apple

The announcement yesterday that Steve Jobs is taking a leave of absence from Apple is one of those events that leads to a reflexive  spasm of half thought out commentary. The mad rush to publish something often leads to some pretty silly statements making the rounds. As a long standing Apple fan, I deferred piling…Read More

Category: Philosophy, Technology


Category: Philosophy, Weekend

Checklist for Pundits

The recent shootings in Arizona came after some very heated and ugly rhetoric from the extreme ends of the political spectrum. Do these folks understand the environment their words create? Perhaps a checklist might be useful for those who might not be aware of what the impact of their inappropriate language is on the public….Read More

Category: Humor, Philosophy, Politics

Searching for the Truth in an Age of Disingenuousness

On the last day of the year, I like to think back about the truths I learned this year. Some were revealed accidentally, others were the work of challenging data analysis. We happened upon some Truths during deep contemplation, and occasionally stumbled across them accidentally. And of course, there was Wikileaks. Regardless of your method,…Read More

Category: Investing, Legal, Philosophy, Really, really bad calls

Intelligence Hierarchy: Data, Information, Knowledge, Wisdom

We have been having a series of interesting discussions lately on various aspects of the economy and markets. I notice that some traders have a hard time discerning between different aspects of the intelligence hierarchy. They obsess about data,  but get lost in it. losing the ability to create context and meaning. They have information,…Read More

Category: Digital Media, Philosophy

The Sole Purpose of Education

In 1914, John Alexander Smith, Professor of Moral Philosophy at Oxford, addressed the first session of his two-year lecture course as follows: “Gentlemen, you are now about to embark on a course of studies that (will) form a noble adventure…Let me make this clear to you. ..nothing that you will learn in the course of…Read More

Category: Philosophy, Psychology