We Have to Say Something, Don’t We?

At the end of a business day, the business press has to sum up why the market did what it did.  This is sometimes the worst business journalism.  Why?  Because there often is no good reason for why the market did what it did.  So, we make something up, because we have an assignment to write the closing report.  It can be hard to write when the market moves a lot for no apparent reason.  It can be hard to write when the markat doesn’t move much.  How easy is it to say, “Nothing material happened today. We now return you to your regularly scheduled programming.”

People have a bias for wanting to see cause-and-effect.  Partly, it is because there are causes for each effect, but discerning causes in complex systems is tough.  Perhaps if we lengthen the time horizon, we can make more sense out of monthly, quarterly, and yearly moves, than to agonize over daily moves.

Personally, I try to tune the daily noise out, and focus on the intermediate term.  I think that is the most useful posture for investors, and would encourage you to do the same.