Monday, July 23, 2007
Singing in the Rain
This is post is about nothing. Sort of.
Indeed, momentum traders and trend-followers tend towards the optimism and see the glass half-full. This needs to be so because faith is inevitably involved in believing the past conveys sufficient information such that it will remain the best predictor of the future (or at least the bias next datapoint over the ensuing interval).
Reversion traders, and counter-trend traders, by contrast, tend towards the skeptical and err on the side of pessimism (by nature). If something isn't already going wrong, such a personality is well-trained in conjuring a scenario for why precisely the future will be unlike the past.
Knowing where one sits on this relative scale is essential for investors and traders alike, for BOTH extremes engender flaws that inimical to incorporating new information into one's view, and therefore optimal decision making.
I listen to detached economists, and they are far more sanguine than skeptics like me, and those I hang out with, certain that a disaster (or cpital dislocation event) is just around the corner. Yet when I hear them ignore what is to these panglossian observers "a wall of worry" ro be climbed, it is me, veritable litany of macro conditions that are increasingly difficult overcome and/or reconcile.
So to optimists, this post is about nothing. Really. But to skeptics and those continually re-triangulating the future course of events on the basis of emerging observations, such observers remind me of the wonderful Gene Kelly seen here at his wettest and best....