Ever wonder what motivates various pundits, strategists and fund managers to spout off about whatever it is they are yammering on about?
Step back and examine all of the various words spilled on markets. Scratch a little beneath the surface, and you quickly realize that not all participants are in a relentless search for the truth.
A few years ago, I noted that good investors have to wear many hats: One part historian, one part mathematician, one part psychiatrist, one part accountant and one part trial lawyer.
When it comes to market commentary, that last one can be especially helpful. Putting a witness’s motivations into broader context can often shed some light on their position. Why did they say that? What incentives might they have? What are they subconsciously rationalizing?
As I have noted before:
Good litigators are always skeptical, but not negative. Is that witness telling the truth? What is motivating him? Is the opposing counsel’s argument logical? Being able to answer these questions makes for a good lawyer – and a good investor . . . When it comes to investing, everyone is trying to separate you from your money. Good investing requires good judgment. Being able to recognize valuable intel versus the usual blather is a huge advantage.
So let’s play a game of cross-examining attorney. Continues here.