The Million Dollar Idiot Indicator

The Million Dollar Idiot Indicator

Yesterday an article came across my news feed that actually made me spit-out-loud as I openly laughed at my phone.

I just can't believe the media these days.

They try to push the idea of a perfect indicator on investors.  Trust me, there is no holy grail indicator.

They will literally print anything for a click, especially if it comes from a "reputable" source.

I guess I was caught up in their click-bait too, but I had to see what drivel they were pandering when I read the headline:

An indicator with a perfect track record just sent a "powerful" sell signal

This had to be good I told myself.

Here's the article.

If you want to read it first and see why I spat-laughed, go ahead before I spill the beans.

OK, did you get it?

So that "perfect" indicator, well, it said "sell" all of eleven times since, get this...2002!

Does anyone understand statistical significance out there in financial-media-bubble-gum-land?!

Eleven times over the past 16 years?  C'mon man...

You can get a coin to flip heads 11 times by random chance.

The worst thing is that whatever this "indicator" is, it likely came from the research of some frat-boy-Wall-Street-lug-head and probably cost a million bucks.

The Million Dollar Idiot Indicator

You need hundreds if not thousands of samples before you know you're onto something.

Now, the stock market has gone parabolic...

It does look like "irrational exuberance" a little bit...

But who am I to say anything more than "it will fluctuate", as our good friend Mr. JP Morgan once said:

J P Morgan stocks will fluctuate

"What will the stock market do!?  It will fluctuate, dummy!" - JP

Markets will do whatever they want and anyone that tries to force their opinions on the market will end up eating cold hard zero's.

Does anyone remember the 80's and 90's?

The market cruised higher and higher into the stratosphere.

I'll leave the non-scientific Idiot Indicators and future predictions to the soothsayers, tea left readers, crystal ball prophets, and their 900-number ilk.

Don't fall for this stuff even if it comes from the mouth of a large financial institution.


P.S. Was that a rant?

P.S.S. You know you actually can beat the market if you have your stats in order

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About the Author

After 12 years as an electrical engineer, I'm proud to bring a scientific methodology to an industry full of unproven claims and bad advice. I LOVE BIG DATA!

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