The Difference Between Advocacy and Analysis

When pundits are rooting for one political candidate or another, you’ll often see them begin discussing only the data that bolsters “their guy” on television or in their columns. They have abandoned actual analysis and have entered the realm of advocacy. In the markets, people wedded to predictions or in love with a position will do the same exact thing.

Tom Brakke of the Research Puzzle has an incredible post today in which he looks at this phenomenon. My favorite analogy he draws is that of a rabid political crowd and the unmentioned corollary of any equity’s cult you’d like to imagine (GLD’s or AAPL’s work really well)…

As the returns started to come in, a telling report appeared on a live blog from the New York Times.  With the evidence mounting that Romney would lose, those at his election party didn’t want to see the coverage being broadcast on CNN:  “Every time the network is turned on, audience members at the Boston Convention Center chant for a change of channel.  ‘Fox! Fox! Fox!’ they yell.”  As if that could have helped.

Imagine investors turning off CNBC and switching to Bloomberg because a guy comes on with a contra view on their favorite sector or stock.You know this happens daily.

Anyway, I’ve selected Tom’s post, odds and errors, as my pick of the day for the new Side Street project at Read the whole thing, it’s pretty perfect.


odds and errors (Side Street)

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