The 4-minute, $7 doctorate in Finance
33 years of experience & insight distilled to its essential essence
To my paying subscribers, I added a small update at the end of my last article if you want to go back and have a look.
[NOTE: Whenever I add information or seek to make alterations (other than the inevitable typos that go out with every email), I do so as an update at the end with a date, so that what I publish can be reviewed in hindsight].
The 4-minute, $7 doctorate in Finance
I was reflecting on my last article plus the unique insight that I uncovered which was included in that publication, and I think it may be one of my most significant discoveries yet. It’s funny how that happens. Sometimes when you find something meaningful it doesn’t always strike you how significant it is, then you sit with it, allowing the implications grow in your understanding and the permutations compound. In this instance, my prior post is tantamount to a unifying theory of finance (markets and the economy).
I have uncovered many unique market insights and developed a number of superb leading indicators - more (and of better quality) than most people who are considered to be best in the field globally. However, I have come to the conclusion that my last article is nothing short of being greater in value than a PhD in Economics and Applied Finance with a Masters Degree in Public Policy thrown in for good measure … and I’m only charging $7/month! Something’s not right there.
The reason that I am able to come up with so many quality and previously undiscovered insights is because I understand what is actually going on, i.e. how finance and the economy works IN REALITY. Why I say that my last article is of greater value than any PhD in Economics and Finance plus a Masters Degree in Public Policy is because they deal with finance and the economy IN THEORY. Theoreticians start in the wrong place, pointing in the wrong direction. By contrast, because I’m on the right track, I’m able to ask the right questions and deduce the right places to look for confirming data.
So why don’t I have a larger following and people tripping over themselves to pay $7/month to get the secrets to the financial universe?
Preconceived misconceptions
In short, my stuff don’t look like what people think expertise in finance is supposed to look like. [Besides, most people just want a trade idea that will payoff in mere days].
When even the “experts” don’t really understand what they are doing and have spent decades building up a public projection of what it means to be in finance and markets (i.e. making noise; talking arcane jargon; and conflating price-action & narrative-fitting on infinitesimally small timeframes with the economy), then how are ordinary people ever going to be able to tell the difference between quality and the usual run-of-the-mill shit? They can’t. Hence, those with the big followers are usually the noise-makers; or those who are masters of the arcane within their sphere of specialty; or those who are always explaining the latest prevailing narrative etc., i.e. those that look like people’s preconceptions of what finance is “supposed to look like”.
It is merely the Dunning-Kruger Effect from another angle: those who don’t know can’t judge between good and not good.
#FCOTY
I was reminded of the Dunning-Kruger Effect yesterday when the 10th annual Financial Charlatan of the Year was run on Twitter. This is where people get to vote on 10 people who the organizer thinks are worthy candidates for such an accolade. On that list was possibly an actual charlatan or two along with people who are just opinionated in addition to some who have said things that didn’t come to pass (or things went in the opposite direction … at least, so far in 2022) etc. The irony of this award is that it is the same people who didn’t possess the ability to assess whether these people were any good (or what the timeframe of their outlook was) in advance, so how do they now possess the ability to determine if they are charlatans? They don’t. It’s simply that human habit of needing to blame people - in this instance, blaming other people for their own ignorance … via the anonymity of social media.
An interesting thing about the Dunning-Kruger Effect is that, not only do people of lower competence, skill or expertise typically overstate their own ability, but people with high competence have a tendency to understate their ability.
I have been involved in markets at a sophisticated level for over 3 decades. It has only been in the last 5 years where I began to gain a fair assessment of my own ability, having always thought less of myself and my abilities than was warranted by the work that I produced. So, I know this bias is real.
If you do need other people’s guidance
Here’s a few tips for those of you who are still working to gain enough knowledge to be able to guide yourself through the world of financial markets and economics:
If someone expresses their view on markets, make sure you are aware of the timeframe of their view. Some people think in days to weeks; others in weeks to months; while others (like myself) often think in terms months to years.
A person can be an expert in one area of finance and have no idea in another, so don’t take their expert status and conflate it with all-knowing. It’s best to find out someone’s area of expertise before taking their view or opinion into consideration.
People are allowed opinions. If you plan on acting on someone’s opinion, be sure to ask for confirming data or other evidence that supports it to clarify the certainty of their conviction, or whether they are just making an off-the-cuff remark.
Take responsibility for your own actions. Even if you act on someone else’s view, it is you that takes the risk, so the onus is on you to do your homework.
We’re all learning and therefore can all make mistakes, so don’t blame people for any personal misfortune you suffer if they were wrong. I remember the joy of learning all about markets when I first started in 1989. It was exciting in those first few years. Having said that, I think that I have learnt more in the last few years than any other time since 1989, based on my own research - finding new things that have never been discovered before. Never stop learning. I think those who stop learning and only recite current (or prevailing) knowledge are possibly the most dangerous to follow.
FWIW, I’m pretty sure I’m not incompetent and deluded in my own ability. Fingers crossed😜