Misleading explanations

If – a few days ago – you opened your newspaper at the business section, you may have read that Asian markets had fallen on the back of investors’ concerns over uncertainty in Europe.  And if you opened the same newspaper a few days later, you probably read that Asian markets had risen on the back of investors’ concerns over uncertainty in Europe.

So, pulling the markets down?  Or pushing the markets up?  Which is it?

I’m rather looking forward to the morning that I wake up to hear (or read) that ‘such-and-such happened last night; but we don’t know why’.  Because I’m pretty sure that, most of the time, most of the people writing about the financial markets have no real idea of why something has happened.

With the benefit of hindsight, some of the better commentators can usually put together a reasonably plausible account of why something might have happened.  But they are seldom emphatic in their conclusions.  On the other hand, the people reporting on what has happened in the past hour, or the past day, always seem so sure of themselves.

Bertrand Russell once observed that ‘fools and fanatics are always so certain … but wiser people are so full of doubts’.

I am not suggesting that financial markets reporters are all fools.  Far from it.  But I don’t think that they would do their credibility any harm if they were a little less ready to offer instant one-line explanations for everything.  Especially when, a few days later, they trot out the same instant one-line explanation to support a totally different outcome.

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