Markets plunged around the world on Friday and Monday after U.K. voted to leave the European Union. While working from home Friday, I spent much of the day watching financial television, skipping between the three main financial news networks.
What I heard was surprising: A parade of folks coming across the screen, saying the oddest things about Brexit. If you are not a regular viewer, your nonsense detector becomes more sensitive. Mine was lighting up as if I were at a flat earth convention.
The philosophy of less noise and more signal is never a bad thing for investors. This is especially true if your perspective is long term, and you don’t actively trade in and out of stocks.
So as a public service, I offer:
The Unofficial Pundit-to-English Translation Guide
|When a pundit says||They really mean|
|“We suggest reducing exposure”||We were betting the Brits would vote remain|
|“I am not an expert in foreign policy, but…”||Prepare for a thoroughly uninformed, useless opinion|
|“The macro forces at work…”||Allow me to construct a reassuring narrative|
|“The smart money is betting…”||I won’t assume any responsibility for this next bit of foolishness|
|“It has long been our position”||That’s my story and I am sticking to it, even if it’s wrong|
|“Our analyst says…”||The guy is going to be out of a job soon.|
|“Our clients are very concerned about…”||There goes this year’s bonus|
|“We don’t see a recession”||We didn’t see the last recession either|
|“ The current trend is…”||Extrapolation isn’t a problem, is it?|
|“We expect the second half of the year”||We were wrong in the first half of the year|
|“The currency trade to make is…”||This is a random guess.|
|“We like what this chart shows.”||The fundamentals are terrible|
|“We still like the fundamentals…”||The technicals are terrible|
|“We have a ‘Buy’ on the stock”||Who is dumping all those shares?!|
|“We rate the stock ‘Neutral.’”||Thanks for nothing.|
|“We are long-term investors”||Wait, why are we even on this show?|
|“Buy gold.”||Buy gold.|
|“There is a lot of uncertainty.”||We have no idea what’s going on.|
Everyone who does financial television and radio — me included — suffers from the same issues: We have confirmation biases, these shows are live, we don’t get to edit ourselves in real time, emotions run hot. Most of all, admitting that you have no clue what the future holds makes for bad television.
Perhaps the best advice for investors to remember is that TV is for entertainment purposes only. Treat us pundits accordingly.
Kudlow: Possibility of a Mild Recession (February 8, 2008)
The PermaBear to English Translation Guide (October 15, 2010)