Explaining the Explainers

One of the more fascinating aspects of watching finance is the never-ending stream of explanations for the market’s action. Strategists, news media and economists all engage in a series of tortured rationales for what just happened. These tend to be after-the-fact reasons that are too smug, too pat and too late to be useful, let alone satisfying.

Forget predicting the future, these folks don’t seem to even understand what happened yesterday.

All too often, they seem to be saying nothing more than “I don’t like that!” but lack either the awareness or courage to acknowledge the subtext of what they are saying or writing about.

To protect the not-so-innocent, I won’t point to specific examples.

It would be helpful if there were annotations to the commentary –sort of like VH1’s pop up videos (I’m showing my age). The insight into the authors’ psyche actually is much more valuable than the commentary itself.

Consider, for example, the countless analyses during the past six years about why the market is overvalued, or why it’s a tech bubble or why we’re about to experience  (choose one) a 1929/1987/2000/2008-like crash. It would have been a huge time saver if a popup explained:

“I missed the bottom and have been unable to find a good way to get into equities!”

It would be helpful if every time there is a complex merger or acquisition, analysts would simply admit that the accounting and tax benefits are somewhat beyond their expertise. “Maybe the deal is a money saver, maybe it isn’t, but in the 27 minutes since it was announced, I simply don’t know.” Of course, then they wouldn’t have a self-promoting reason to discuss it on television.


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  1. Expat commented on Mar 25

    It’s mostly that nobody knows nothing about nothing. Humans are pattern-seeking creatures by nature. This is useful survival behavior linked to learning, a meta-instinct of sorts. But our brain sees more patterns than exist.

    For example, animal shapes in clouds or the face of Jesus in a slice of eggplant (aubergine for those on my side of the pond). We employ PhD’s to study history and write long books explaining the inevitability of such and such event.

    In reality, clouds are just thousands of tonnes of water suspended in mid-air. Jesus Was Here in cut-up fruit seems less plausible than Kilroy. And history is ex post facto; we frankly never know where we are going or why.

    But people get paid lots of money to pretend they know the future. When they use tarot cards and chicken bones, we mock them. When they wear suits and carry sheepskin diplomas we pay them millions.

    It’s all good fun, part of the human condition. I mean, does anyone take CNBC and Wall Street in general seriously any more anyway?

  2. f95kai commented on Mar 26

    I wish Mr Hussman would print this and hang it above his bed. I’m one of the fools who believed his explanations of impending doom for far too long as they were eloquently crafted and seemed intellectually sound. My bad.

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