The Straw Man

Increasingly, anyone with a bearish opinion about markets or really, anyone who even ventures to suggest that perhaps buying at any price is a bad idea, is being castigated for what the punditry is characterizing as a nefarious attempt to grab headlines by predicting an imminent collapse.

That’s a straw man – plain and simple. That’s not to say there aren’t people out there whose sole purpose for writing research or for blogging is to capitalize off people’s inherent fascination with doomsday predictions. Obviously, there are plenty of those people around.

But you want to be careful about lumping everyone who doesn’t share your sanguine view of markets into the same category.

Any macro analyst worth their salt takes a cross-disciplinary approach to understanding markets. Depending on the analyst, the definition of “cross-disciplinary” could be narrow (i.e. mixing two related fields of study like economics and finance) or wide (i.e. mixing everything from economics, to political science, to philosophy) or somewhere in between. In short: it’s a ton of work and the best macro research is often characterized by monumental feats of holistic thinking.

So don’t be surprised when your narrowly-construed conception of how the world works doesn’t play well with people who are deep thinkers. Similarly, don’t be surprised when people who actually spend their days doing actual macro research come to conclusions that don’t line up well with some kind of absurdly simplistic strategy for allocating assets.

Real macro research is now being systematically trivialized by the punditry. Read these excerpts from a piece called “No Talent” by Josh Brown:

Someone forwarded me a 10 minute video clip of supposedly well-meaning people predicting a market crash ‘within the next 12 months.” Historically, this would be well within the realm of the possible, if not necessarily a high probability.

The link to the video was sent to me reverently, “These guys are really smart, they know what they’re talking about.”

I considered that for a few minutes. It got me thinking about how little talent it takes to make an exhaustive list of all the negatives and things that could go wrong, and then pass the whole pile off as though it’s profound. It is not profound.

I could make that list right now off the top of my head. Domestic issues, international issues, financial issues, technical issues, demographic issues, political issues.