It is fairly common
knowledge that the more input one has before making an informed decision the
better likelihood a preferred outcome might be.
Well, I'm going to go in the other direction for just a moment to claim
that the efficiency we seek in stock market analysis is sometimes dimmed by an
overload of useless or redundant information found in mediums such as the
internet, media, and other business outlets.
Sometimes the essence
of what we seek (capital preservation, portfolio appreciation, etc.) is best
obtained with less data flow and more by a reliance upon
long-term fundamental review and good old-fashioned common sense.
Some have suggested
that we live in a new paradigm...one punctuated by 24 hour access to all sorts
of information. But as a result of this
generation of thought there has also been a bravado to suggest that markets can't correct downwards; that access
also provides greater nimbleness; and that there is an entitlement to portfolio
success that older generations (ahem!!) just couldn't have foreseen in their
day.
Indeed, while "new
math" has given us, this writer included, models and methods that make mathematical
calculus more skillful, even strategies too
boldly applied are doomed to fail
because of human aggression or a reluctance to accept that markets, like life,
have their inevitable ups and downs.
The fact that one might
not have lived long enough to experience that reality....or to acknowledge it.....doesn't
make him/her immune to the orderly progression of things.
I have even heard a
member of this new paradigm generation suggest to me that "investing is not a gamble anymore". For
his generation, indeed, investing in the market has become "too
easy". Rolling the dice and always
coming up a winner will do that to the uninitiated. Whereas we have laws against playing Russian
roulette with a loaded gun, we have no such prohibitions against committing
financial suicide.
Deep
breath
Look, I deal in numbers
and calculations all day, every day, too.
I use data because when applied judiciously it can out-process even the
most basic of human calculations and instincts.
Information is the foundation of successful investment outcomes.
But today's appetite
for data has reached such unprecedented levels that what we used to think of as
balanced decision-making has sometimes become skewed towards an expected domain, and uncorrelated to impartial
schools of thought.
More so than in the
past we are "data rich and strategically poor". The tools we have at our disposal, as in
yesteryear, are only as good as the operator using them. In many cases, the tools have outpaced our
ability to leverage them, leading to the proverbial "data overload".
Today one can
"Google" anything. One can
also find homogenized answers to any investment question.... ETF's and mutual
funds, for example. The true value of
portfolio management as a profession is to profile the client accurately and to
customize a solution which is unique to his risk/reward tolerances. Objective data mining has become richer and
deeper than ever, no matter who clicks the switch on the operating system. But antiseptic answers will only get you so
far. That's why it is vital to have an
empathic professional with whom to interface.
So let me ask this
question: with all this data at our disposal, why, then, have we been unable to
gain traction on solving some of our cultural, financial, and moral dilemmas
that continue to divide cultures, citizens, and nations? Modern financial engineering seems only to
have prepared a one way street for the most fortunate.
If you really think
about it, the lessons we have learned from ubiquitous information access in
this "new paradigm" should have already resulted in greater personal introspection
and awareness....not less. Not more
rioting, poverty, terrorism, or hunger....but less. No?
The thing is, as this
observer sees it, is that you can't claim to have achieved a New Paradigm of enlightenment
if you don't have everyone along for the ride.
