Some interesting little bits and pieces from around the place.
Trust Barry Ritholtz to nail this:
n. A false statement that keeps getting repeated no matter how often it has been refuted.
Great nugget as always from Barry. I have quoted his ‘zombie bear’ description many times and am happy to have this new ‘zombie lie’ to add to my vocabulary. Loads of examples of both Zombie Bears and Zombie Lies can be found on the Zero Credibility blog (you all know the one I mean).
I’m not a big reader of the mainstream news sites, I don’t have much against them its just that they tend to lag the market and its themes and developments. But this article is great, loads to quote from it, but is best read in full as it highlights the confirmation bias inherent in those pundits with their egos heavily invested in their forecasts, those unwilling to move as the facts change. Bolding is mine.
I’m not saying that all of those advisers who believe another recession is imminent are automatically guilty of sloppy thinking. But many of them are: When the facts on which they base their argument end up changing, they simply look elsewhere to find other facts that support their conclusion.
They remind me of the famous line with which Adlai Stevenson, the Democratic party candidate for president in 1952 and 1956, used to mock his opponents: Here’s the conclusion on which I base my facts.
To be scientific in our approach to the markets, we need to be ruthlessly empirical in following the lead of the data, in whatever direction it might take us, regardless of our preconceived notions.
Finally, a thought-provoking article from Jonah Lehrer:
Does Depression Help Us Think Better?
Thomson and Andrews imagined depression as a way of forcing the mind to focus on its problems. Although rumination feels terrible, it might make it easier for us to pay continuous attention to our dilemmas. According to Andrews and Thomson, the mood disorder is part of a “coordinated system” that exists “for the specific purpose of effectively analyzing the complex life problem that triggered the depression.” If depression didn’t exist — if we didn’t react to stress and trauma with endless ruminations — then we would be less likely to solve our predicaments.
In the spirit of taking a scientific approach Lehrer also states, quite clearly:
It’s an intriguing hypothesis (which is why I wanted to write about it), but the evidence for this “analytical rumination” theory is mostly speculative and indirect. (It’s also worth pointing out that the theory has many critics, who make several important points.)
Like I said, food for thought.