The background for anyone reading this for the first time:
- This blog series follows 9 small investors with different risk (and personality) profiles (for their profiles read this post, and your can find their investment strategies here).
- I’m a fan of equities (because I believe in productive assets) and of passively-managed exchange-traded index-tracker funds (because I mostly don’t believe in investor management fees) – so this is also really an experiment to see how the Satrix SWIX Top 40 (an equity ETF) bears out against the other options available for small investors.
Last week, I started talking about the big indicators that mean something in the world of investing. And here is the list (with one or two additions):
Now if you’re looking at that table and saying “Hmmm, this tells me nothing”, then yes, that’s exactly right. For some reason, as a student, I just assumed that a sufficient knowledge of finance and economics should let me look at this picture and know what’s going on. As it turns out, it still doesn’t. So here’s my metaphor for the day.
There is almost no narrative to role out, because narratives are movies and the list of today’s indicators is a movie still. When you start watching a movie halfway through, you generally do one of the following:
- Ask the person that’s been watching from the beginning to fill you in.
- Continue watching, and hope that it starts to make sense.
- Wikipedia it.
- Stop watching, and do something else.
Unfortunately, when it comes to this particular movie, it’s more of an epic mini-series. No one has watched it from the beginning. A few have tried to understand it from the start, but they end up reading a lot of plot summaries – and most plot summaries are badly written and focus on the favourite character of the author. Oh, and they all sound suspiciously like fan fiction. At the same time, the plot line is erratic and the genre non-specific (it transitions from comedy to thriller to courtroom drama with no pause for exposition).
What this means:
- The person next to you probably isn’t watching it. If they are, they’ve only got a rough idea of what’s going on, and they’re more than likely devoted to the handsome protagonist who shows all the signs of being a psychopath (that’d be Mr Free Market – his invisible hand cares not who it smites). Also they’re already irritated by your ignorance. So expect little help.
- Wikipedia is manned by the fundamentalist fans that speak in their own language.
- So you’re left watching something that you don’t understand in the hope that one day the proverbial penny will drop (which feels like effort).
- Or you switch to another channel (after all, Ru Paul’s Drag Race is far more entertaining).
Which means that most of us stop paying attention. Until we hear a general “OMIGOD”, at which point we scurry around trying to make sense of the madness.
My point is: don’t despair of data tables. They’re not the story. But once you know some of the background, then they become interesting and real.
Until next week.