One of the insidious paradoxes with which investors, large and small, have to make is that the abundance of information complicate rather than facilitate financial investment choices.
thought I was back to mind watching the progress of Bags in the two final sessions of last week, when the indices have been driven - according to the news - before rising sharply and then fall even more heavily on a series Data on 'American occupation apparently conflicting.
Let us determine the facts before proceeding with some reflections on the value of information.
A look at a guide as the index ' S & P 500 (see chart below, by StockCharts) is known as the last two weeks, after a failed attempt to rig the 200-day moving average at an altitude of around 1430, prices have retraced and then enter a pause for consolidation between 1375 (at the 50-day moving average) and 1400.
For seven sessions in a row the movements were of little significance, before rising slightly to touch the resistance in 1400, then with a slight fall to retest support at 1375.
The market, in short, has crushed in a mortar water for almost two weeks and docks reason was simple: everyone was attesa delle statistiche mensili sull’ occupazione Usa , il dato macroeconomico più seguito dagli operatori perché più in grado di condizionare, almeno nel breve termine, l’andamento delle Borse.
Cronaca di un caotico epilogo di settimana borsistica
Giovedì, alla vigilia del rapporto sull’occupazione, è poi accaduto qualcosa di inatteso. Gli indici Usa hanno fatto segnare rialzi superiori al 2% tra volumi sostenuti, registrando in alcuni casi (Nasdaq 100 e Russell 2000) dei nuovi massimi. Il dado sembrava tratto a favore di una ripresa del trend rialzista. I motivi?
A leggere le cronache della grandi agenzie finanziarie as Bloomberg or Reuters , then picked up by newspapers, the reasons were two: the retail sales figures exceeded expectations by two discount chains like Wal-Mart and Costco and " surprising decline "of 17 000 units in weekly unemployment claims.
One investment strategist said with a particular focus on Bloomberg, James Lowell, goes on to say that the data unemployment, which fell last week to 357 thousand units, had been the real catalyst for the rally. It concluded: "If the employment report Tomorrow's surprising even slightly positive, continue to gain strength the idea that maybe the economy (U.S.), instead of being in a phase of deceleration, is stabilizing. "
Friday, however, dreams of stabilization have broken and all the Wall Street stock indices flops have more than 3%. To "understand" why we try again in light of market comment proposed by Bloomberg .
There are two "causes" of the mini-crash that the article highlights: the new highs and crude oil, especially the unexpected leap in the unemployment rate , In the past one month from 5.0% to 5.5% . Combined, the two factors came back to feed the fears of recession .
The consensus of analysts had taken into account an increase in the unemployment rate only 5.1%. Why the macroscopic forecast error ? Always
Bloomberg allows us to understand that the analysts in estimating the size of the workforce was not taken into account the large influx of market students hunting for summer jobs. The phenomenon has come to affect this year in May - not, as usual, to June - for the early closure of many scuole.
In un periodo di incertezza e difficoltà economica per molte imprese, questa nuova offerta di lavoro non è stata assorbita, andando a gonfiare il numero dei disoccupati .
Per il resto, il saldo tra posti di lavoro creati e distrutti (il dato di solito più seguito nel rapporto sull’occupazione), negativo a maggio per il quinto mese di fila, la leggera decelerazione della dinamica dei redditi e l’andamento stazionario delle ore lavorate si sono rivelati “in linea con le attese.”
Dati incompleti e confusi, vale a dire rumore
Se mi dilungo un po’ con i dettagli it is because I want to give an idea of \u200b\u200bhow confused were the interpretations that have been pursued in the markets in recent days. I would comfort the reader that at this point you feel overwhelmed by a sense of growing concern. He has good reason.
And 'it may never be enough a slight decline in weekly applications for unemployment benefits for an end to fears of a recession? Or, can satisfy an abnormal increase in the unemployment rate to turn? (Some people think that the unusual effect in May, applications for employment of students, not included in the method of seasonal adjustment, influenced at least half in the increased 0.5 points as of Friday). All this has
little sense, as it seems unreasonable that the market will embark, for these reasons, in a 2% rally on Thursday in a crash and 3% on Friday. The
confusion, of course, creates confusion and other evidence, among many others, had the player who has left Saturday to read page 5 of Sole 24 Ore . Under the dramatic title
"market tensions - The collapse of financial markets," the paper presented yesterday two antithetical readings of the event's key financial week.
Mario Platero , the New York correspondent, wrote that "maybe he really the recession is going to make his way regardless of the accommodative Federal Reserve policy." the data on employment, he said, "worry."
Riolfi Walter, on the other hand, in an analysis published alongside, complained of the irrationality of a market, the report on Friday - in his opinion, less faults, better than expected - "If anything should go up." Even?
The benefits of a wider vision of
breath at the end I will try to draw some lessons from this cacophony of voices. But before you get there, it will be useful to say what I think the statistics on Thursday and Friday. Looking at them from afar more, more in the context, it is easy to give them a meaning clear enough.
My view is in tune, as often happens to me, with what analysts Northern Trust, led by the excellent Paul Kasriel . And I will explain using a couple of their charts.
The first, below, shows the trend of the unemployment rate dal 1989 a oggi, in parallelo all’andamento del tasso a breve manovrato dalla Federal Reserve, i Fed funds .
Uno sguardo di lungo periodo consente subito di capire che la disputa sulle anomalie statistiche del dato di venerdì (così enfatizzate, ad esempio, da Riolfi) ha una rilevanza marginale.
Se il tasso di disoccupazione, a maggio, fosse salito al 5,3% anziché al 5,5% non sarebbe infatti cambiato granché. Il profilo di fondo resta quello di un ciclo in marcato deterioramento, in forme analoghe a quelle che hanno accompagnato l’instaurarsi delle passate recessioni (evidenziate nel grafico dalle bande grigie).
Detto per inciso, il grafico di Northern Trust consente anche di percepire una “costante” nella condotta di politica monetaria della Federal Reserve . E cioè il fatto che i Fed funds (nel grafico, la linea rossa), non hanno mai imboccato un ciclo di rialzi prima che il tasso di disoccupazione iniziasse a scendere.
Le attese di rialzi dei tassi a breve entro fine anno, che i mercati a termine avevano di recente preso a scontare, vengono liquidate, alla luce dei precedenti storici e del perdurante deterioramento del mercato del lavoro, come un abbaglio.
Il secondo grafico riguarda la serie storica delle domande di unemployment since 1984, reported with care to smooth out the excessive volatility of weekly data by using a moving average of four weeks.
Again all the "noise" on the details of the dispute was pretty much futile. The unexpected decrease of 17 000 units, on Thursday, according to many, would have triggered the short-lived rally of the grant is reduced to the status of a detail of little significance.
The substance is the fact that the average four weeks - to 368.500 units - fits the past three months beyond the threshold of 356 000 (indicated by horizontal line) than in last two cycles has accompanied the start of a recession . The interpretation of
Northern Trust, which subscribe to its rationality and adherence to data very significant because they placed in a context of long-term economic statistics is that this week are not only compatible each other, but also consistent with most of the evidence in recent months, from the most different areas of the U.S. economy.
Together, they make a framework that allows you to say - for now in a statistical certainty and without definitive - that a recession , negli Usa, è già in corso da qualche mese.
Rumore e informazione
A coniare il termine di noise ( rumore ) applicato all’andamento dell’economia e dei mercati finanziari fu, nel 1986, l’economista Fischer Black .
Intendeva così indicare tutti quei dati o quelle interpretazioni che sono l’opposto della vera informazione : idee non accurate, dati erronei, perturbazioni che confondono in quanto espressioni dell’ inefficienza dei mercati e che finiscono per incentivare l’agitarsi convulso di un’attività purely speculative.
distinguish between information and noise is not easy. It is not easy to learn to "filter" the noise in order to really obtain content information, a process that, graphically, can be exemplified by the two figures below, taken from the excellent Fooled by Randomness (Fooled by case) Nassim Nicholas Taleb.
In the first picture signal and noise are still mixed together. In the second, we applied a filter that has eliminated the noise makes the signal clearer.
Taleb, in his book, he gets angry in particular with giornalisti , che, spinti da una professionale vocazione a raccontare storie, caricano di significato qualsiasi manifestazione di “rumore” e ricorrono continuamente a spiegazioni causali anche quando all’opera ci sono o solo il caso o nessi troppo complicati per prestarsi a facili semplificazioni.
I mercati finanziari sono creature complesse e instabili – popolate da milioni di attori animati dalle strategie più diverse. L’idea che in ogni istante siano isolabili delle cause precise per le oscillazioni dei prezzi è, a rifletterci un attimo, una sciocchezza.
Che fare, dunque? Come la mia ricostruzione degli eventi della scorsa settimana lascia intuire, to "filter" the noise the first step is to move away abundance of (pseudo) information.
Much of the data, collected with great frequency, they give an 'illusion of knowledge not help but understand. On the contrary, confused. Forced to invest an enormous amount of time just trying to discriminate between meaningful data from meaningless. And an incentive to continue to react with surface decisions and, therefore, high risk of error.
If the noise is so counterproductive, because there is so much in financial news?
Come osserva Richard Bernstein , chief investment strategist di Merrill Lynch , nel libro Navigate the noise, investing in the new age of media and hype , il motivo è che il rumore, in verità, a molti risulta gradito.
Per gli investitori “ è divertente ed eccitante ” a tal punto da essere una sorta di "droga" o di “canto delle sirene”. Per gli intermediari finanziari e per i media è redditizio dal momento che aumenta la domanda per i loro servizi. E’ per questo che, alla fine, “la gran parte dei flussi d’informazione è rivolta al trading di breve periodo”.
But what use can have the worry of short period for the prudent investor? None.
real investor's interest is to observe the markets and make choices in a long time horizon , as I tried to explain in my post The benefits of long-term . As far as I argued there, I would just add a short probabilistic analysis conducted by Taleb Fooled by Randomness in .
Imagine, writes Taleb, a particularly gifted investor who can put together a portfolio whose expected returns are 15% higher than the short-term government bonds with a volatility of 10% (results, the other one, well above the average for a portfolio that can have a total return of 10% with volatility of 20%).
The probability that such a portfolio records is positive, for different time intervals, as summarized in the following table:
Within every second, every minute or every hour the probability of success will be just over 50%. But within a year will rise to 93%.
imagine yet, adds Taleb, apprehensive that our investor controls - through the use of modern technology - the development of its portfolio every minute for eight hours a day. Each day will undergo a 'grueling alternation of 241 positive surprises and 239 negative surprises - in a year will become 60,688 60,271 moments of pleasure and moments of disappointment.
If we consider that the negative experiences, as demonstrated by studies psychology and behavioral finance, they weigh more than positive ones, our investor - exposing themselves to an examination to of its high frequency performance - end to condemn the suffering and dissatisfaction.
If, however, the same investor decides instead to check the results of its portfolio only once a year, would procure 19 positive experiences every 20 years!
Bernstein writes in his book : "People are often surprised to discover that I do not read newspapers regularly certain financial [...] the fact is that I will not necessarily keep pace with the markets. The more one tries to do this and to be aware of everything that happens, the more at risk of doing trading based on the noise [...]. I prefer to see the forest rather than each individual tree. "
The council, I think it should be clear. The prudent investor is aware of what there is noise in financial markets, is concerned to ensure quality of its information sources and decision-making process. Find more information but less value, but agrees less well-considered decisions.
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