The Signal and the Noise (Part 5)

By |2017-07-17T12:21:17-04:00June 16th, 2017|Global Market Update|

So how do you decide? Photo: Sebastian Lühnsdorf. Source: Morguefile When a news event occurs, is it a new signal, or is it just noise? The European Central Bank is maintaining a negative inter-bank rate – is it signal or noise? The Consumer Price Index just came out flat from the month before – was that signal or noise? It’s tempting to label all these interim economic reports financial static. And a lot of them are. So much data comes at us from so [...]

The Signal and the Noise (Part 4)

By |2017-07-17T12:21:17-04:00June 15th, 2017|Global Market Update|

We’ve talked about cutting out noise. Can we boost the signal, too? Oscilloscope. Illustration: Brian Elliot. Source: Wikipedia Looking at a signal-to-noise ratio is a good way to understand why we get so distracted. It’s the proportion in our lives of meaningful information compared to irrelevant data that bombards us all the time. It’s like the level of a radio station’s programming above the static background. And there’s a lot of noise in our lives—diversions that make it hard to hear what’s important. So, [...]

The Signal and the Noise (Part 3)

By |2017-07-17T12:21:17-04:00June 14th, 2017|Global Market Update|

How can we stay focused? Public Domain. Source: Wikipedia We live in a distracting world. Email, Facebook, Twitter—they all cry out for attention. And it doesn’t help that our phones and tablets and computers beep and vibrate and flash at us with every new stimulus. Since companies like Google and Facebook make their living off advertising, they find ever more innovative ways to get ever more relevant advertising right in front of our noses, where we can’t ignore it. But investing is a long-term [...]

The Signal and The Noise (Part 2)

By |2017-07-17T12:21:17-04:00June 13th, 2017|Global Market Update|

How can we tell what’s really happening? Great Circus Parade, Milwaukee, WI. Photo: Royal Broil. Source: Wikipedia When the newsreels stop rolling and the microphones go away, we’re sometimes left with the impression that a circus parade just rolled by. Did anything actually change, or did we just see a cavalcade of horses, camels, and clowns roll down Main Street? We’ve heard about news stories with an underlying agenda too many times. When we read any important news item, something that always changes is [...]

The Signal and the Noise (Part 1)

By |2017-07-17T12:21:17-04:00June 12th, 2017|Global Market Update|

How can we concentrate on what matters? Radio frequency doubler. Source: Wikipedia Between Twitter and newspapers and talking-heads and junk mail proclaiming the next turn in the market, what’s a long-term investor to do? How can we stay focused on what we need to know without being distracted by all the noise? The first step is to understand that most of what’s on the airwaves is static—background verbal clutter of no more consequence than elevator music. The real news that matters for your investing [...]

Alice and the White Queen

By |2017-07-17T12:21:17-04:00June 9th, 2017|Global Market Update|

Is the market trying to believe impossible things? Illustration: John Teniel. Source: Wikipedia A classic “children’s” book – that isn’t really for children – is Lewis Carrol’s Through the Looking Glass, his sequel to Alice in Wonderland. In the book, Alice and the White Queen have this exchange: “There’s no use trying,” Alice said. “One can’t believe impossible things.” “I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, [...]

War, Peace, Inflation, and Software

By |2017-07-17T12:21:17-04:00June 8th, 2017|Global Market Update|

Is inflation dead? Source: Morguefile Growing up in the ‘70s, inflation was a fact of life. Sometimes we would see prices rise four or five percent in a single month. Persistent, high inflation was a problem, economically. The purchasing power of our savings was depleting at a rapid rate. Federal regulations kept interest rates low; banks couldn’t pay more than 4.25%, even while inflation was running at 10% per year. Gerald Ford declared a war on inflation. Annual change in CPI. Source: St. Louis [...]

Investors from Mars and Venus

By |2017-07-17T12:21:18-04:00June 7th, 2017|Global Market Update|

Can we ever understand one another? Photo: Amshudhagar. Source: Wikipedia In 1959 English novelist C.P. Snow gave a lecture on “The Two Cultures,” bemoaning the lack of understanding between literary intellectuals and scientists, between science and the humanities. At the time, folks were worried that scientists had never read Shakespeare or Dickens, and that the Atomic Age would usher in a technocratic tyranny, along the lines of Huxley’s “Brave New World.” But to these humanities scholars Snow asked, “Can you describe the Second Law [...]

Between Jobs

By |2017-07-17T12:21:18-04:00June 6th, 2017|Global Market Update|

Are we working hard, or hardly working? Man shoveling at construction site. Photo: Igor Ovsyannykov. Source: Fancycrave Both. The unemployment rate declined to its lowest level since 2001. Employers added jobs for the 80th straight month – the longest such streak on record. Wages are up 2.5% from a year ago – more than the 2% wage gains we were seeing last year, and significantly more than the 1.5% inflation rate. But unemployment fell because people are leaving the workforce. The labor force shrank [...]

A Diverse Picture

By |2017-07-17T12:21:18-04:00June 5th, 2017|Global Market Update|

What’s happening in the world? “Convergence” by Jackson Pollack. Source: Albright-Knox Art Gallery Chaos. At least, what appears to be chaos. England just saw its third terrorist strike in three months. I had to double-check the dateline on the news article I was reading this weekend to be sure it wasn’t from last March. The details of the story seemed so similar. Donald Trump pulled out of the Paris climate agreement, a move supported by conservatives by widely panned by many others, including political, [...]