We Have to Say Something, Don’t We? – The Aleph Blog

Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control

Posted on 13 August 2008 by David Merkel

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.

David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures. Also, though David runs Aleph Investments, LLC, this blog is not a part of that business. This blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David's has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions. Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.