Freakonomics and the market
I may be wrong, but it strikes me that the articles that appear in nearly every newspaper every day that describe a particular day's stock-market movements are pretty much worthless.
That's from a post at Freakonomics yesterday.
Howard Weaver piles on a bit: I think the honest answer is that collective ignorance about markets and economics leads the press to a herd mentality in which we all just repeat what a handful of business writers tell us.
I've thought the same thing recently as I've watched the talking heads at ESPN and CBS talk about the NCAA tournament. Three weeks ago they said (as did we) that we shouldn't count on all four No. 1 seeds making the Final Four because it's never happened. So what do we have? We heard that Carolina's weakness is defense. Hmmm, not the games I've watched. And the chances anyone gave Davidson? Ha!
You can add your own examples of "expert commentary."
OK, it's not exactly the same because one involves "explanations" for an occurrence and the other involves predictions of behavior. Still, there is a feel of herd mentality and worthlessness to both.
Comments (2)
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John, you're right that your sports example doesn't quite match the stock-market example. It's one thing to make fun of experts for not being able to forecast well. It's another thing to note when they can't even explain the past.
So here's a better sports example. Often in the MLB and NBA playoffs, a team that won its previous series 4-0 has to wait a week or more while its rival-to-be ekes out a 4-3 series win. If the former team wins the first game of the next series, the commentators will say that it's obvious that the break allowed the team to be sharp and well-rested. If the team loses, those same commentators will say that it's obvious that the layoff put the team out of its rhythm and made it stale. Just as the stock-market "analyses" mentioned in the Freakonomics blog aren't based on interviews with traders, the sports commentators' after-the-fact "explanations" of Game 1 have nothing to do with what actually happened with the team during the hiatus.
Posted on April 4, 2008 3:55 PM
Much better comparison.
Posted on April 4, 2008 5:35 PM