Market Punditry as Astrology or “'Jesus,' S. said. 'Aren’t you ever off the clock?'”

There are maybe twenty-six people in the world who get that headline. Hi Izzy.

Last night as I was holding court and thinking I had the rapt attention of my devotees, I began discoursing on a fascinating study of climatic teleconnections and crop failures in history. A young lady in the audience looked at me with what I took to be great admiration and said "Jesus, aren't you ever off the clock?"

"Nobody knows anything"

-William Goldman

From Monty Pelerin’s World:

Is recent market behavior the beginning of a market turndown? No one knows, although it is easy to find people providing “answers.” The value of these predictions approach those of astrologers and fortune-tellers. What follows are some thoughts regarding markets.

History and Markets
History is a summary of what historians consider relevant. Selectivity of a limited number of events is required. Behind these events are millions of other events and processes that must be ignored. Many of these are causal elements and not even known to the historian. What is reported is the outcome(s) of these complex interactions.

Historians then focus on a few causes that rationalize the outcome(s). Often these are correlative; never do they fully explain the outcome they purport to. That is the nature of all history.

Discussing the performance of the stock market is an exercise in history. It is subject to similar simplification. At the end of each market day, analysts “explain” why the stock market went up or down. These explanations are more rationalizations than explanations. Stock market outcomes can never be explained in terms of one or two variables, regardless of how relevant they might appear to be or how enlightened the analyst sounds. Soundbites preclude more than a couple of variables. Yet complexity does not care about soundbites.

To retain the aura of “expert,” these self-professed gurus must provide short, pithy and incorrect answers. A truthful answer would go something like the following:

I have no idea why stocks went up or down today. Nor does anyone else. There are literally thousands (millions?) of variable affecting peoples’ decisions to buy or sell stocks. No one knows them all and no one knows how to measure or weight them on a particular day. The market went up (down) because more buyers (sellers) participated today....

...MORE

HT: The Big Picture

If curious, here is the source of the young lady's line .

The Goldman quote was last seen in "The Joy of Randomness: Central Bank Strategy, Management Technique and Stock Selection".