LOL
There is no one more cynical than I.
I just looked up last week's report from the DOL and found the following:
"In the week ending December 17, the advance figure for seasonally adjusted initial claims was 364,000, a decrease of 4,000 from the previous week's revised figure of 368,000."
However, this week they revised the 364,000 to 366,000 so instead of the decrease of 4,000 initial jobless there was a decrease of just 2,000, so it was half as good as they reported.
This week they reported an increase of 15,000 new jobless and I will gladly book a bet that it will turn out to be more than that after next week's revision.
Re: Markets and Media--Chicken or Egg?
Scott Raynovich
12/29/2011 3:58:55 PM
Street Smart,
Exactly right. One of my frustrations with "financial journalism" is that most financial journalists have never traded or even invested and really don't know much. They often fall back on easy assumptions and "spurious correlations" that are easy to make with little statistical proof.
I.E. "Today the market sold off for XYZ." The bottom line is that you can never prove much of anything unless you have a large statistical database from which to test. On any given day the market action is what it is because millions of buyers were being matched with millions of sellers. Making an assumption about what each and every one of them was thinking -- or even what the "majority" of them were thinking -- is somewhat absurd! Maybe a bunch of them just had to sell or buy!
fair enough.
I guess I am more cynical than you, Fred, as my expectations of seeing integrity from government agents are not high...
I know we agree philosophically Scott, but I would prefer more rather than less information. I would not be happy if the data were withheld as you suggested. I am able to make some sense of it and would only have the words of politicians if they did not give me some numbers which I can check with some effort and understand with some thought.
Markets and Media--Chicken or Egg?
Street Smart
12/29/2011 3:06:24 PM
Another way that the media exacerbate the problem of reporting statistics is in trying to explain why the markets performed as they did on a given day. Some talking head will inform us that the Dow is down because "the market was looking for" X and it got Y instead.
But efficient market theory would suggest that those expectations and even the statistics upon which they are based would already be reflected in the market, if not 100%, then certainly a great deal.
So, it's like a hall of mirrors--the media explains how statistics moved the markets and the media explanations themselved become factors in market movement. Chicken, meet egg!
Re: 8 or 9% unemployment
ProfR
12/29/2011 2:57:58 PM
Yes, it is important to take a longer term view when looking at investments. Being influenced by the latest number will cause a lot of useless trades.
News is reported too often - daily or even hourly. This causes an over-emphasis on the data that was just released. Monthly unemployment numbers, minute-by-minute stock index changes, consumer confidence, retail sales, whatever - is mostly noise in the best of cases.
Knowing that much of the just-released data isn't quite right just makes it more important to base investment decisions (and voting decisions) on more than what's in the news.
The reporting about unemployment is an example - most stories recently seem to be about how the unemployment rate declined by 0.1% or new jobless claims are up (or down) slightly. I don't hear much perspective about the reality that the unemployment rate remains high and the recent changes are small.
Fred,
Don't get me wrong, I agree with you. The government statistics have major flaws, the greatest of which is the "Birth/Death Model" in the employment statistics which basically add or subtract 100s of thousands of jobs based on misinformed conjecture.
We would probably be better off if the government just eliminated the data, now that I think of it. Wouldn't the market be healthier if it just relied on private data rather than government-manipulated statistics?
I think one of the big problems over the last 20 years is the government thinking that they can control every aspect of the economy. There are a buch of academics watching screens always overreacting to their own data. Think of Greenspan and 2002 and the housing bubble. It's like trying to oversteer a Ferrari -- if you don't known what you are doing you crash the car.
Lies, Damned Lies and the Media
Street Smart
12/29/2011 1:24:57 PM
Statistics have been spun since the age of cave paintings, but I think what's really scary is the role of the mainstream media in giving credibility to invented data.
Somehow the newsworthy version gets reported and neither the corrections nor the opposing points of view ever make it into the sound bite do they?
I appreciate your comment, thank you Phoenix. It is my cherished hope to have an effect on the acceptance or rejection of misinformation. There is another dimension too.
A source of information currently misleading the public is the use of comedy and glib writing to conceal the fact that there is no substance to the message.
We can all call to mind a "comic" or a funny writer who makes us laugh while destroying someone or something he does not like without offering a single word of evidence.
They can be recognized easily since their message is always amusing and destructive and is never supportive. It is simply sarcasm or ridicule and I leave it to you to come up with the perpetrators of this form of character assassination.
I give Saturday Night Live a pass for using comedy since that is their avowed purpose and they apply it in a reasonably evenhanded way. But I do not give a pass to those with obvious agendas that they attempt to hide from those they are trying to influence using glib attempts at humor.
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