The New York Times has never claimed to be the equal of the Wall Street Journal in the depth of its business coverage. But the advantage of being a few steps removed implies a better ability to see the forest for the trees.
Thus, it was truly stunning today to see a front page article in which the author announced the following:
"Anybody searching for cause-and-effect logic in the daily gyrations of the market will be disappointed...instead, the market has become a case study in the psychology of crowds..."
In the words of that noted day trader, Shakespeare, 'twas ever thus'. If ever there were a time when TV news anchors could divine the ups and downs of investors from overarching news events, that time is long gone. But of course, the logical sides of our brains keeps seeking the connection.
The truth of the matter is that even the idea of 'crowds' determining market movement is in and of itself ridiculous, in the sense that the 'crowd' in question includes all of us little guys trying to figure out how to make the next mortgage or tuition payment. Statistically, the only 'crowd' that matters is the exclusive fraternity of institutional investors whose mutual fund or pension decisions truly can move a stock, if not a market.
So when you hear someone on TV--or even the New York Times--convey a connection between external circumstances and market movements, feel free to tune out. They don't know any better than you do. Of course, that reporter can claim they got their insight from someone on Wall Street...thus, it must have at least a grain of truth. But if their source really did have secret knowledge...if they truly could intuit how things would trend...do you honestly believe they would share that insight with a reporter?
This is akin to the chief chemist from Pepsi walking up to the chief chemist from Coke and saying, "hey, your product tastes pretty good! What exactly is in it?"
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