Posts filed under “Really, really bad calls”
I wanted to share an interesting email exchange from this weekend. “R” writes:
“You occasionally shred an argument with more than a hint of animus. I don’t want to say its ad hominem, but it comes damn close. Some people get viciously disemboweled, while others are more gently corrected. Why?”
That’s a fair question. You have identified a pattern, and it is not a coincidence. There are some commentators, analysts, economists, fund managers and strategists I respect. There are others who do not warrant that respect, and I actively dislike their approach.
Why? In a word, Process.
There are those folks who have an approach based on a defendable methodology. There approach to evaluating markets or the economy could be based on fundamentals, it might be derived from quantitative metrics, it could be valuation, balance sheet, macro, momentum, GARP, trend following, technicals, long/short, psychology, sentiment, contrarian analysis.
Call it plug & chug: It doesn’t really matter what the methodology is, so long as it begins with some objective input, runs through a process of sorts, and determines an output.
There are folks in this camp who I am happy to occasionally disagree with. They force me to sharpen my own analysis, be more specific, consider alternatives. These include the likes of Doug Kass or David Rosenberg or Lakshman Achuthan or James Bianco.
Anyone who has an objective approach to evaluating the ever changing mix of inputs to the markets or economy or stocks. These folks are often intellectually curious, have flexible minds, and a high degree of integrity. Whether I agree with their conclusions or not, I respect their process.
Then there is that other group. They are all conclusion, zero input. Process is irrelevant to them, Outcome is all.
They work backwards. They start with a conclusion, and sift through all the data to justify that conclusion. They do not change their minds. They do not care about facts or data or input. They never admit mistakes. “Truth,” as we have discussed in the past, is an irrelevant inconvenience.
They are ideological jihadists.
This group contains a mix of bad fund managers, perma-xxxxs, political ideologues, corrupted journalists, partisan hacks. They are prisoners of the cognitive biases that are so fatal to good investors.
Its called “reaching a conclusion” for a reason; its how you end, not how you begin. We do not say “reaching for a conclusion” but that is how member of this group seem to operates
Once upon a time, I used to respectfully disagree with these folks. That has faded over time, as I have concluded (from various input) that these folks are simply not worthy of that respect. They are not honest brokers of intellectual debate, they merely seek to further their own agendas.
In the process, they make the jobs of those trying to assess the world in terms of risk and reward, opportunity and chance more difficult. To investors seeking truth, clarity, and understanding, these folks are the enemy.
That is why I give them no quarter.
I don’t know what is more idiotic: This horrific Reuters misquote, or the impossibly idiotic commenting system they have in place. First, the misquote: “Turning to the housing market, Barry Ritholtz at The Big Picture is predicting the worst in housing is likely over. Sure prices could fall another 33 percent — but it’s unlikely…Read More
As we noted in these pages a few weeks ago, Paul Kasriel gave Michael Boskin’s selective memory a who-dat-what-for.
This morning, Barron’s picks up the same theme:
IT’S PERVERSE OF US, WE ADMIT, but we get a real kick out of a dust-up between economists. If nothing else, it demonstrates that the dismal science is not a science and not necessarily dismal.
What occasions this somewhat less than profound observation is a recent commentary of Northern Trust’s director of economic research, Paul Kasriel, taking issue with an op ed piece in our sister publication, The Wall Street Journal, by Michael Boskin, a former chairman of the Council of Economic Advisers under the first President Bush.
Mr. Boskin blamed the lackadaisical recovery on the Obama administration’s economic policies, a view that is widely shared these days. Paul avers his intention is not to argue for or against those policies, but to express wonder that in fingering the causes of the feeble recovery Mr. Boskin somehow neglected to include the extraordinary contraction in bank credit.
In making his case, Mr. Boskin compared the current recovery with more robust ones, particularly the first quarter of 1983, when Martin Feldstein was chairman of the Council of Economic Advisers under President Reagan.
On that score, Paul finds it “curious” that Mr. Boskin makes no reference to the 1991 recovery when he was the Council’s top dog. Our initial reaction to the omission was, for gosh sakes, Paul, since when is modesty a sin?
Paul then proceeds to note that one year into the rebound in 1983, GDP growth weighed in at 7.7%, accompanied by a 6.4% growth in bank credit. That’s significantly better than the 3% rise in the first year of the present recovery, when bank credit actually contracted an awesome 7.9%.
And it also happens to be a heap better than the 2.6% rise in GDP in 1991, when bank credit rose only 1.4%.
It goes without saying, Paul concedes, that other factors besides bank credit play a part in GDP growth. But he insists that the shrinkage in bank credit has been a substantial element in the disappointing pace of this dispiriting recovery.
“If the current betting trends are to be believed, it now seems certain that a recall is in the cards” -Paddy Power, Irelands Biggest Bookmaker July 14, 2010 press release > Speaking of dumb bets: Its time to revisit a recent prediction market “winner,” and review the strengths and weaknesses of these markets: Recall this…Read More
As a follow up to yesterday’s look at Time magazine’s Housing covers, Paul Macrae Montgomery of Universal Economics was kind enough to share this report from 1992. In that research piece, Paul had made mention of an October 1st, 1990 cover story in Newsweek: The Real Estate BUST. > > How well did that cover…Read More
I have a commentary on the Time Magazine article coming this week — I find it is both inaccurate and misleading — but meanwhile, here is Jim Bianco’s take on it: ~~~ 1. Time Magazine – The Case Against Homeownership September 6, 2010 -Time: Homeownership has let us down. For generations, Americans believed that owning…Read More
Each year, I try to avoid writing anything about 9/11. But I had some issues to work through this year, and I find jotting a few notes down helps me. My personal experience on 9/11 was secondhand. I was in the LI office of the firm where I was Market Strategist. Our HQ and trading…Read More
We at the Big Picture have never been fans of economist Michael Boskin. The infamous Boskin commission was an intellectually dishonest exercise in clever ways to understate inflation, thus lowering Social Security obligations. (I found that approach cowardly, and instead offered up some SS truths). His commission helped the BLS to habitually understate inflation, the…Read More
> Martin Wolf, who has been more right during the period leading up to the crisis, and thereafter, than anyone else I can think of, blames the present economic malaise on political timidity: Obama was too cautious in fearful times: “Suppose that the US presidential election of 1932 had, in fact, taken place in 1930,…Read More
Invictus here. Been a while. Been a bit busy and, frankly, not much to say of late. As a general rule, I’d say that folks should refrain from posting on things they know nothing about. The old saying (Abraham Lincoln, I believe, Mark Twain, according to commenters’ citations, attribution in dispute) comes to mind, “Better…Read More