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Stop Listening to These Guys



January 29, 2010 – Comments (9)

CNBC had the standard two "professional money managers" on this morning, debating where the market is heading next (which makes up roughly 90% of CNBC's programming these days.)

One says the Dow will fall 40%-50% in the next six months, the other says it will rise 20%.  

The gulf between these forecasts proves how completely ridiculous predicting the market is. Totally, completely, 100% ridiculous. There's no science behind it. There's no logic behind it. It's a guess pulled straight from the colon.  

I started wondering what we'd think if two meteorologists came on, one predicting it was going to be 100 degrees and sunny, the other saying it would be 10-below and a blizzard. Without a doubt, we wouldn't listen to either of them, and politely ask both to find new professions. But that's basically the same forecasting gap the CNBC "pros" are predicting.

So why do people spend so much time listening to market forecasters? I have no idea. But, hey, keep in mind, I was watching CNBC this morning, and probably will every morning for the foreseeable future. 



9 Comments – Post Your Own

#1) On January 29, 2010 at 12:43 PM, Dobbes (< 20) wrote:

I watch the internet stream of Bloomberg TV and its got a lot less of the sensationalism that CNBC has, although at times it sure seems just as bad.  You also have to endure "Step into my bloomberg terminal *WHOOOSHING SOUND*" every 5 minutes.

No doubt CNBC thought it would be riveting programming to have two pros debate opposing viewpoints -only after about 3 minutes I'd probably start to hear farm animal noises and occasional flatulence in place of their voices.  They really aren't doing that well for a media company, or a financial media company at that.


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#2) On January 29, 2010 at 12:56 PM, Turfscape (45.49) wrote:

Hear! Hear!

Sadly, the population lives for this kind of dichotomy. We want to align to a team...we don't care what the team necessarily stands for, or what it's based on, we just want OUR team to beat THEIR team.

This is the state of all debate, currently: Politics, economics, religion, sports, entertainment...doesn't matter. I just want to win (or at the least, see you lose).

So, we put two barkers up on the screen, let them shout while we wave our giant foam fingers that say "Bears" or "Bulls" (not a reflection of Chicago sports, by the way) and ridicule our opponents for not thinking like us. Oh, and we can also blame them when the market doesn't go our way, too: "Well, sure the indexes all plummeted. With all the bears and short sellers, stocks dropped irrationally. If they would just invest like me, then the indexes all would have gone up!"

So, I guess all I can do is sit back and say, "Go Saints!"

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#3) On January 29, 2010 at 2:00 PM, XMFPhila100 (92.54) wrote:

The only way you get on those shows is by being outrageous.

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#4) On January 29, 2010 at 2:06 PM, Teacherman1 (< 20) wrote:

That's why I watch with the sound off. I just want to see the numbers and not hear the opinions. I do the same with Bloomberg. Though sometimes even the graphics give me a pause.

Why would Bloomberg say "Bankers are huddled to plot...", rather than say "Bankers are meeting to plan...". Does the use of "sinister words and phrases add anything meaningful to the statement?

Next I will have to watch with the sound off and my eyes closed.

Have a good day. 

This too will pass. 


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#5) On January 29, 2010 at 2:15 PM, goalie37 (92.53) wrote:

I find it interesting that all these people think they predict the future, while Buffett (who has more money than all of them put together) admits he can't predict it.

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#6) On January 29, 2010 at 3:04 PM, carcassgrinder (54.89) wrote:


best investing advice I'll give you this year....


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#7) On January 29, 2010 at 3:22 PM, russiangambit (29.45) wrote:

CNBC usually gives 2 opposite views, that is their version of "balanced" reporting. Except they turn them into shout out sessions where each side has exactly 30 sec to explain their views, without any possibility to logically explain their view one way or the other. And if CNBC anchor disagrees then 30 sec are cut to 10 sec. And for that reson CNBC programming is worthless.

I like Tom Keene on Bloomberg and Pim Foxx who have very long uninterrupted interviews. And I am quite upset that now Tom Keene podcasts are no longer free. CNBC take notice, people actually willing to pay for thoughtdul interviews with no shouting.

Just today I turned on CNBC while driving and they where all talking about how C tock cannot go up because of the government involvement and government needs to get out of the way before the stock can go up. They all conviniently forgot that it is not like government wanted to invest into C in the first place, C stock cannot go up because it is deep in a hole, government involvement is just a side effect.


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#8) On January 29, 2010 at 3:35 PM, outoffocus (24.44) wrote:

So why do people spend so much time listening to market forecasters? I have no idea.

Probably the same reason people look to the back of fortune cookies for "lucky numbers", get their palms read, read horoscopes, etc.

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#9) On January 30, 2010 at 9:47 AM, anticitrade (99.62) wrote:

So why do people spend so much time listening to market forecasters?

A good question that deserves more than just my usual sarcasm.  The truth is, we find a large percentage of Fools attempting the same thing as these television pundits.  Whether they call it technical analysis, macro economic implications, political pressure, or just plain old speculation it all amounts to fortune telling.  (I know I will take some heat from the TA contingency for this, and I will admit that maybe a small percentage of TA'ers are actually capable of beating a 50% guess for short term movement).  

So why are so many investors trying to predict the future?

Two reasons:

1) Its the golden goose.  If you can predict the short term future of the market you have a money making machine that prints money.

2) Ego.  Since predicting the future is obviously very desirable and attempted by many, saying that you are capable of it would mean you are smarter/more capable than pretty much everyone else.  Additionally, since making a prediction on the future is easy to do many are willing to take a shot at it.

In my opinion, guessing at the future is a sure fire way to land yourself a swift kick in the pants.  Best case scenario you fail at it quickly and obviously and learn the right lesson from it.  Worst case scenario you get lucky a few times, your ego grows to dangerous sizes, and you begin betting the farm on an ability you dont have. 

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