Wednesday, July 2, 2008

Fair and Balanced - not

The media, me included, made reference to the fact that we have just seen the worst June since 1930 - and we all know what was going on back then (hint - the post 1929 crash bear market). The media has a job to do and it is not just provide information. It is to sell subscriptions or keep ratings high for advertising dollars and digging through the archives for a "worst June in 78 years" headline will definitely qualify.

Let's get some of these reporters on Jerry Springer, though. Where were the reports that the rally from the mid-April low to the ultimate peak in the S&P 500 in mid-May was just about the same size? How about the rally from the March low to the early April high being even bigger in terms of points than the June decline?

Everyone is lazy and cannot pick market starts and finishes. Calendar readings are so much easier. And we can even automate the process.

It does not matter that we measure from the start of the month to the end of the month but rather that we measure from the start to the end of trends of any size you choose. Calendar dates are artificial cutoffs and the market does not care about them.

Yes, we need structure to pay managers on performance and in that case it is apples to apples. Manager A beat Manager B in June and over time the intra-month peaks and troughs don't matter.

But if you are trying to create a sensationalistic headline with the worst June since the depression, please, please, please be fair and say that the "big decline" was preceded by an equally as big and equally as fast gain!

But when the market goes up everybody is happy and details are not so important, right? Sounds like complacency in a dangerous market.

9 comments:

Anonymous said...

Dollar weakening and commodities selling off on same day???

Quick Takes Pro said...

What commodities sold off? I didn't look at meats but otherwise grains, metals, copper (OMG), softs, energy all up! Wait, cotton was down.

Regardless, weak dollar - strong commodities is not a lock for any given day, week or month. These two asset classes can move together for long periods of time depending on inflation/deflation and what's going on in other currencies.

Quick Takes Pro said...

And what did that have to do with fair reporting of the market? :-)

Anonymous said...

A little testy? Copper, steel, coal, the XME, RTP, etc. Not worth corresponding? Sorry to bother you.

Anonymous said...

I think one of the "must" in TA, in order to be truely effective as a trading tool is clear detachment from anticipation from news or events.
Like today, common sense would have said ECB raise rate>>>EURO gets strong>>>US$ gets weak.
But in reality, EURO got dumped.
That shows.....
Event & the general perception or common sense do not work always.
I believe after a brief spike, US$ will see lower low in a spectacular fashion.

T.C.B.

maynardb said...

Place part of the blame on 24/7 TV coverage of the Business News.

It is not reporting when it becomes "I think" and "Maybe" and 90% entertainment.

Somewhere in TA it must say "What is, is"

If that is all it is, TV could do 5 minutes on the hour. Never happen.

Quick Takes Pro said...

The selloff in commodity related stocks (not commodities themselves) signals the transition from one sector to the next as the market peaks.

This John Murphy observation just scratches the surface as it occurs as the market is peaking! Let's give it some slack and say that the market has just peaked.

What does that tell us? Plenty more downside ahead. We're discussing where to hide and where to flee in the newsletter this coming week.

Quick Takes Pro said...

TCB,

There is a problem wit TA in a vacuum. While I agree with you that all the information really should come right from the market, reaction to news is also very telling from a sentiment point of view.

The dollar "should" have cratered but it didn't. This tells us that perhaps it was already factored in.

As you saw in the newsletter, the dollar hit a critical level and rallied.

Quick Takes Pro said...

maynard,

so true, so true.

I posted a while ago, as a media veteran, rating trump content. All you need is to be right enough to keep the eyeballs coming back and when you have to fill 24/7 there is a lot more fluff. Interesting fluff but fluff nonetheless.