Nothing says spring in New England like peepers singing out in the dusk. When I drive home from work I can hear their chorus when I go by any wetland or even damp spots along the road. I don’t even have to roll down my windows. Peepers are small, usually less than an inch long, and they weigh just a fraction of an ounce. But when they get together, the sound can be deafening. A large gathering in the right location can be heard more than a mile away. The males are the ones singing the mating call, and the greater the competition, the louder they chirp.
When you listen to a chorus (like the link above), sometimes the sound seems to be ordered into discernable rhythms. How can this be? Each male is competing with the others, displaying his genetic fitness. How can their peeps be coordinated? It’s not like there’s a peeper-conductor waving a reed as a baton.
In fact, each peeper sings to his own beat, and they wait the same amount of time between chirps. They’re not trying to sing in unison, but with thousands of peeps sounding out every minute, they fall in and out of sync on a regular basis. Our brains are wired to look for patterns, so it sounds like the chorus has been organized.
Markets act the same way. There are thousands of stocks moving according to their own internal and external news flow. Each company has earnings reports, new products, leadership changes, and is affected by the economy and financial developments. The news comes at them every day, but its impact is different for different firms. Each company “peeps” according to its own schedule, and its behavior in the marketplace is unique. Taken in aggregate, however, it can look like there’s a market-conductor up front, waving a market-baton.
Our brains, however, can impute coordinated patterns from a gathering of random movements. We see pictures just like we hear patterns in peeper-songs. Not every market has a story, but we’re story-telling creatures, building our lives around narratives – some heroic, some mundane – always with a recognizable outline. And sometimes the stories we tell ourselves lead us astray.
I love hearing peepers on a cool spring evening. Their song evokes hope, hope for longer, warmer days ahead. But that’s another tale, one that the frogs don’t know anything about. Their only story is the one they’re singing right now.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”