we get it... daily

March 27, 2007


We all know that the markets function much like any frightened animal. Sometime they run up for no reason, other times they run down for no reason. Oh, of course some pundits and "analysts" try to make sense of it all by observing trends and taking surveys, but these are momentary guesses and all come heavily disclosed with caveats that when read closely all essentially say we have no idea what we're talking about.

One of the worst of these is called Consumer Confidence. Talk about your scared little animals!  Basically this little rodent of a statistic is how likely you, Joe and Jane consumer, are to buy a big new car or upgrade your stereo system in any given time period.  Confidence numbers slip when the market slips, and they get stronger when the market is strong.  And worse, when confidence is reported as slipping, the market slips, and when confidence is strong, the market tends to gain.

And talk about significance.  The number is generated by polling 5000 households.  Current US population is closing in on 300 million, so we are basing this on a very small percentage of the population.  Since when is a sampling of 1.5% statistically significant in a verbal poll?

Luckily confidence is only reported quarterly so it doesn't totally wreck the market.  It just pushes it along in the direction it's currently going.


  Remember, it's called a Con Game.  And Con is short for Confidence.

And by the way, Consumer Confidence slipped today.  Reason given: Weakness in the market. 


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