Aug

25

One of the most ridiculous things is to see market move on projections made by various forecasters, almost invariably with an axe of their own. But regardless, several queries about such projections should be made:

1. Are they accurate.
2. Do they provide any new information
3. If true, would they have any impact on the market.
4. Are they self referential to help a position or status along.
5. Are they counterbalanced by anyone else projections.

Almost more ridiculous than this are the moves on consumer confidence. The confidence is 99% correlated with past stock market moves, and is backward looking and indirect and one of many such confidence surveys which are random in aggregate over and above the stock market because they are all adjusted seasonally different ways or not.

Tom Marks adds:

I had a recent brush with market absurdity myself. The other day I received an e-mail from some sort of ex post facto gypsy inviting the unwashed masses to his seminar in a midtown hotel where for a couple of grand admission he would impart the finer points of recognizing a false breakout.

Prior to this gentleman's generous offer to defog my confusion, I had thought that conclusive proof of a false breakout was when me and everybody else dumped the stuff we had all just rushed in to buy because some generally acknowledged "key resistance level" had been breached. This may unduly untechnical, but generally speaking whenever something loses money, it didn't work. That's a terse truism that I'm not sure I'd be able to discuss for an entire day, no less charge two thousand dollars apiece to get people to listen to it.

Then again, if I were a regional sales representative for a leading snake oil manufacturer, hopefully they would have ample warehouse space because they would be stuck with a large inventory.


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2 Comments so far

  1. Matt Johnson on August 26, 2009 10:41 pm

    So what’s more important the forecasts or the ‘trend’ (however you define it)?

  2. Glenn Tipton on August 27, 2009 11:36 pm

    Nice post Vic. As a side note you look like you are/were hanging out at my fraternity the way you have your hand over your mouth. Just replace the tennis racquet with a bong and you’d fit right in.

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