The important thing is to stick to your convictions about recieving ABC News Alerts in your in-box.
People want a way of measuring the unmeasurable: in this case, the economy; with daily tracking polls, an upcoming election. My advice is to tune it out. And also: buy Magnaprox. It's a great deal at this price!
I agree that's it's irritating, but to be fair, if half the households in America had a financial stake in the outcome of yesterday's Cubs' game, that would probably be on the Breaking News email alert as well.
1: I realize it's an opt-in system. I demand higher quality content and, barring that, reserve my right to bitch and moan about it on the internet DOT COM.
It's especially goofy, given that the Dow is just 30 of the 3000+ companies listed on the NYSE. And as you note, it has bounced around like this daily for months on end.
But it's the easiest journalism ever. Numbers went up! Numbers went down! Well, of course they did; they always do. And if you can't identify exactly what made the numbers go up or down, go ahead, just pull something out of your ass. It's a staple of stock market reporting.
IME, nobody serious cares about the Dow. S&P 500 for the casual observer, more specialized indices for real people.
I stand ready to be corrected by our friends in Finance.
There was a great NPR piece about the reliability of those single-phrase explanations of the day's market fluctuations. One fun part was hearing clips of different media outlets giving conflicting explanations of the same event: "The market was up 200 points today on the good news the Belize is producing more bananas," "'the market only went up 200 points today, lower than expected, because Ben Bernanke had a visible erection in public."
Bottom line: The little explanations are total bullshit.
Ben Bernanke had a banana from Belize visibly erect in his pants?
I shouldn't have written "visibly erect". Ben Bernanke had a banana from Belize in his britches?
Stanley - be forced to listen to CNBC at work, all day long. You'll long for the silence of the grave.
I find the explanations more probable when they are directly finance-related. For instance, it seems plausible that the stock rally after the announcement of the Geithner plan was in response to the Geithner plan. Not so plausible that stocks fell on inauguration day because Obama was inaugurated, for instance.
The most useful tidbit I everheard on this topic was a journalist who explained that CNN charges higher rates to its advertisers when their ads run during BREAKING NEWS.
If that isn't an incentive to broadly define BREAKING NEWS!!, I don't know what is.
In addition to being able to customize which news alerts one receives by subject matter (weather, sports, celebrity suicide pacts), you should be able to choose between "noteworthy events with time value" and "the other 98% of what we report."
I'm not even sure how you use the "Dow up 200" breaking news if you are actively trading stocks that very second. It's not clear if you should sell on the high prices or buy on the good news and upward momentum.
If you've figured out the right strategy to deal with all this, you probably aren't using ABC to keep you up to date on the market -- you've probably got some kind of whizbang trading interface that shows you bid/ask sizes and all sorts of important esoteric stuff. And you're incredibly rich.
God I hate the way stock prices have become Top News, whether it's headlines or the ubiquitous stock crawl or the factm that not only does my iPhone come with a stock market app but it can't be deleted. Because stock prices are as basic a part of people's lives as a calendar or an address book. Not.
Out of my ass, I would say the economy and markets are based on 40% "facts" and 60% sentiment or optimism/pessimism. At times, the latter can go to 90%. I feel more confidant about why bubbles happen than why bubbles pop.
The people selling the tulip bulbs or desert McMansions (or Syracuse expeditions or Yeswecanchangewecanbelievein) need confidence and the power of positive thinking to close the deal.
Bullshit, simulacra? rules.
My 77 year old father, becoming somewhat more immobilized in recent years, has recently taken to sitting on the couch and watching CNBC all day. He even had my mother move dinner time up by 15 minuets so he wouldn't miss Jim Cramer's Mad Money show. I am not thrilled with this development.
Was it Graham? Anyway, Berkshire Hathaway just got downgraded. The Graham/Keynes/Buffett value investment model probably ignores the value investors wearing beer barrels. Keynes said the uncertainty was absolute. Probability is also a comforting delusion.
To quote Daniel Mainwaring:"I just want a way to lose more slowly." But then, I am a bankrupt, so what do I know.
Don't worry Spike, maybe your father's savings will be destroyed by Cramer's advice, but the death tax would eat it up anyway.
The S&P 500 really is the more meaningful index, but the news people usually lead with the Dow and often fail to mention the S&P at all. If you watch actual business shows, they usually talk about the Russell 2000 small cap index too.
Most of the best insanity happens in the NASDAQ.
The attempts to put political spin on stock market jumps, and the attempts to predict the stock market, are in many respects the same as the Roman practice of inspecting the viscera of animal sacrifices, or the Chinese inspecting cracks in tortoise shells. That is to to say, the forecaster can only really know what to say if he has a hidden agenda.
It also seems likely that tortoise-shell diviners had a way of fixing the results, since the system for reading the cracks actually was pretty unambiguous.
My father has fairly recently started gambling big* on stocks. He was getting towards the age when he'd like to be thinking about retiring, looked at his savings and realized that, at current growth rates, there was no realistic human lifespan in which he'd be able to retire. Somehow this led him to the conclusion that he had nothing really to lose (since he'd never be able to retire anyway), and the possibility of big gains (if he got lucky). He gets almost all his investment advice from CNBC. So far, he's lost almost all of his life savings. (He made big bets on Bear, Lehman, WaMu, and Citi, among others.) He's recently become genuinely perplexed as to how these people can be on tv making millions of dollars talking about their stock picks and yet be so consistently wrong. Anyway, he's depressed as hell about all of this, and I'm more than a little worried he's going to kill himself.
* Gambling very small in absolute dollars, but gambling very big relative to his net worth.
26: That's awful, Brock. Has he gotten any help for the depression? Does he know where to call if he's thinking of hurting himself?
27: Oh, he takes meds. He's been depressive all his adult life. I don't actually expect him to hurt himself, it just wouldn't completely surprise me if he did.
... who the hell cares?
Lots of people just like with missing white girls.
As for the quibbles about the S&P 500 being the better index, according to this the correlation between the Dow and the S&P 500 is 95%
I find the explanations more probable when they are directly finance-related.
As market reporters know, so they're careful to dress up speculation in the most plausible terms. I did this kind of thing for a few months, tracking ups and downs in small-cap companies and writing capsule reports. Sometimes the explanations were obvious: earnings reports came out better or worse than expected, news from industry giants boosted or dragged down smaller firms in the same sector, there were fluctuations in related markets. But probably half the time, I'd scan the news, maybe call the company, read the rantings of insane day traders on Yahoo Finance threads, and the best answer was still "fuck if I know" or "everything's going down the toilet" (this was in the spring and summer of 2000).
Oh man, Brock, that is a crappy situation.
I wasn't actually looking for sympathy--the last line was meant to be more matter-of-fact than it maybe came out. Anyway, CNBC sucks. That was my broader point.
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Didn't someone come up with a similar idea here six months ago?
http://idlewords.com/2009/04/wrong_tomorrow.htm
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7: IME, nobody serious cares about the Dow.
The DJ has a much longer historical record than the S&P 500, and as Shearer says, the S&P500 tracks with the DJ. So in the economic history context, the DJ is the important number.
In the 'what you should invest in' category, indexes are basically useless, except as a sentiment tracker.
26: He's recently become genuinely perplexed as to how these people can be on tv making millions of dollars talking about their stock picks and yet be so consistently wrong.
Because they get money from rich people who get their money (which they lose) from people who watch CNBC. Call it an open ponzi scheme.
Anyway, he's depressed as hell about all of this, and I'm more than a little worried he's going to kill himself.
Then get him some help, Brock. Seriously, it's pretty demonstratable that economic losses tend to unhinge people worse than just about anything. Look out the window, guys are shooting up everything they see.
And given that you're mister understatement and mister stiff upper colon, I'm guessing things are worse than they sound. So: please do something. Thank you.
max
['I'm sorry he's in a state.']
hi Sir Kraab! I'll be in Austin in late May, probably like the 20th to the 31st... maybe I'll see you there?
What's important, of course, is figuring out why the young women at Fenway with Jason Bay t shirts seem just a little cuter than average. Taunting JRoth?
The Dow Jones would logically be predicted to fluctuate more in a short time than the other indices which all track each other, because it contains fewer data points.
So, more likely that there's a significant increase or decrease on a certain day, which can be written about as if it means something.
the S&P500 tracks with the DJ
Might this be circular, though*, due to jittery traders focusing on the DJIA, thereby ensuring that the larger market tracks the DJ?
*Not a rhetorical question; I have zero stock market experience.
I heart the micro-distinctions of reliability that can be drawn between different economic indicators which are, in a macro-economic sense, completely unreliable.
The DJ has a much longer historical record than the S&P 500 ... So in the economic history context, the DJ is the important number.
Except that the DJIA is like George Washington's axe. So many companies have entered and exited the sample since the index's inception that longitudinal comparisons over long periods don't necessarily mean anything.
So, more likely that there's a significant increase or decrease on a certain day, which can be written about as if it means something.
Nah - if you look at the chart provided by James, the fluctuations are very similar. Thirty (the size of the Dow) is actually a lot of data points.
Might this be circular, though
No. The Dow gets a lot of publicity, but not so much that its movement could dictate the rest of the market.
max gets this right. The only thing I'd add is that they use the Dow because they've always used the Dow.
What's important, of course, is figuring out why the young women at Fenway with Jason Bay t shirts seem just a little cuter than average. Taunting JRoth?
Tell you what, you know where's a good-looking crowd? Penguins games. Not sure how a sporting event where all but the shittiest tickets are over $35 is packed so full of attractive women in their 20s.
Not sure how a sporting event where all but the shittiest tickets are over $35 is packed so full of attractive women in their 20s.
Perhaps the same reason that crappy, overpriced discos can be full of attractive women: selective disbursement of freebies as a marketing tool.
Someone should actually try haruspex investing. It could be simulated, but it would be more fun if someone staked a haruspex $100,000 or so. After throwing away millions on one kind of fortuneteller, surely someone has 100 k left for the other kind.
I'd rather be an augur than a haruspex. Fewer expenses; cleaner.
My 77 year old father, becoming somewhat more immobilized in recent years, has recently taken to sitting on the couch and watching CNBC all day.
After becoming somewhat immobilized in his last years, my father spent a lot of his time buying old toys on Ebay and watching the same old WWII documentaries on the History Channel. I'm so glad he didn't fritter away his remaining time on CNBC.
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This is just meant to make everyone laugh, right?
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Yeah, that was me again. Stupid not mine computer.
42: So many companies have entered and exited the sample
My favorite dance through the Dow: AIG in April 8, 2004; AIG out September 22, 2008.
Back in my time in the financial industry, we (rank-and-file margin clerks) did look at the DJIA as a predictor for the next day's work load. That stopped being very accurate during the internet bubble, but recently it seemed to be a pretty straight correlation: DJIA up, less work; DJIA down, more work. The other crazy thing about the internet bubble was how many people started trading options like they were Garbage Pail Kids cards. So even minor swings in the NASDAQ could have outsized reprecussions (in our view), since so many people were margined to the hilt to trade options. (This was mostly individual options, very few people had the money to do big plays in index options.)
Someday, when I have money again and can travel, I will attend meet-ups and tell you all the crazy stories I can't put on the internet. Some of the stuff I saw over the past 13 years was insane beyond belief.
Substantially correct if infelicitously phrased.
crazy stories I can't put on the internet
Oh come on, don't be a tease. Give!
48: Yeah, I'm bummed about it. But he has legitimately had a lifelong interest in television coverage of the stock market, so its not totally out of character. Its Jim Cramer these days, but growing up we watched a lot of Louis Rukeyser.
I imagine when I get to be that age I'll be parked on the couch watching old Orioles games, so I can't be too critical here.
45: I'm having a lot of trouble with this explanation.
I imagine when I get to be that age I'll be parked on the couch watching old Orioles games, so I can't be too critical here.
What are you talking about? Your plan is entirely respectable and time-honored; this CNBC nonsense is just crazy and pathetic (no offense, people with crazy and/or pathetic parents!).
49: The look on the dog's face says it all, really.
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This story is a total waste of a promising headline.
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"Doga runs the risk of trivializing yoga by turning a 2,500-year-old practice into a fad," said Julie Lawrence, 60, a yoga instructor and studio owner in Portland, Ore.
That would be terrible.
Minny needs to write a novel. We should lock him in a room.
57: It was mostly a commentary on the low quality of Orioles baseball.
Now yoga for dogs. Next, yoga for bodies without organs. Where will it stop?
"Calm your feet after calming your soul with the Huntington from Terrasoles. This innovative shoe is perfect for your after-yoga errands and your pre-pilates cappuccino."
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Why the hell am I replying to the CT climate troll again? It's like I can't help myself!
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Know who else is cuter than average? Young women in the Garden in Montreal gear.
Go Habs go!
Know who else is cuter than average? Young women in the Garden in Montreal gear.
Well, this thread seems too perfect to pass up the opportunity:
I was on Fox Business News today. As an "expert". I'm not sure whether I or the network should feel more suckered.
(Seriously, my senior team member came over yesterday and said "Hey, want to take an interview on [the area I cover]?". I said sure, since we usually get print reporters who want a few quotes and some background information on the area. He writes off the acceptance email then says "Ha! You're going to be on Fox Business News!". Bastard.)
69: Congrats, Po-Mo. I'm sure you brought them up a notch (or three).
But for the interview, they just put you in a studio with a robotically controlled camera, and pop in the earpiece which keeps a continuous feed of the channel except during commercial breaks.
I never watch CNBC or FBN... Those 7 minutes of listening while waiting for my segment were so utterly depressing. I swear they did like 10 different topics in that time, managing to explain precisely nothing important about any of them. Why so many finance professionals seem to keep them around completely escapes me when various internet aggregators provide the same news in a more tolerable form at the same pace. Near as I can tell, it's just sort of kept as background noise, because everyone else does it.
You may not be interested in the stock market, but the stock market is interested in you.
71 -- My guess is that hearing some little segment or other puts one on inquiry notice on the subject. There's also the theory that investors are like a flock of starlings, and one should keep an idea about changes in the breeze to keep from getting crapped on.
(I'm not violating the analogy ban, but ascribing analogy to others . . .)
the captured ship captain looks a bit like ST, hope he'll be released safely