IS IT TRUE OR IS IT WORTH ANYTHING? | 2005-11-13
I have repeatedly pointed out the fact that the Wall Street Journal regularly talks about scientifically conducted tests between champanzees and market experts.
The chimpanzees toss darts at a list of hte Fortune 500 and the that is taken as a prediction of what a profit-seeking investor, a rich person in a coat and tie, should buy. Against the chimps' dart tosses are place the costly analyses by by market experts.
No one is surprised that the results are dead even.
So does this cause one single person to value the market experts' analysis as worth one penny less?
No way.
Ladies and gentlemen, this is cash on the barrelhead.
This is as real as reality gets.
You will not find one single person who invests real money inthe real stock market who wil deny this for an instant.
You will not find one single person who invests moneyinthe real stockmarket who would pay a stock market analyst a penny less.
No, this is NOT a matter of the analyst being right or wrong. In fact those hiring the analyst are being perfectly rational. Who cares if the professional is right or wrong? He IS the professional.
That is all that matters.
Professional futurologists are ALWAYS wrong about the future.
Who cares?
Every futurologist who wrotes a book today will be an even more professional, better paid futurologist tomorrow.
No stock market analyst ever lost a dime by being wrong.
Welcome to the real world.
Let's take a market expert called Suburban Blitzer. Suburban Blitzer, like all analysts, predicts the market with the exactly the same precision as a pair of dice.
So?
If a suburbanite loses money by following Suburban Blitzer's advice, he is seen as unfortunate. He has lots of company.
But what if a suburbanite loses money betting on the dart-throwing of a bunch of chimps?
You know, thought you act like you don't, that that would be considered nuts.
So it is perfectly RATIONAL for a suburbanite to pay Suburban Blitzer lots of money, not because he is right, but because his name is Suburban Blitzer or Ronald W. Gross and Sons or Standard and Poor.
He is not right, but he is worth money.
Got it yet?
So who wants to be right?
Let me explain this another way:
It is far more important to be correct than to be right. Being correct is worth money.
So if you quote Suburabn Blitzer correctly, nobody denies that you were correct. If you lost money, all your neighbors lost money, too. Being wrong with Suburban Blitzer is correct. Losing money with Suburban Blitzer is excusable.
Losing money with a chimp makes you a laughing stock.
Do you really think the difference here is not worth money? Suburban Blitzer earns every penny you pay him.