06/13/11 Outside the box

There's too much 'consensus' in most headline stories. After all, guys that live on sound bites are not known for their tortured thinking process.

Here are two recent commentaries that have stood out for me:

http://www.marketwatch.com/story/imprecise-data-skews-economic-view-top-forecaster-2011-06-13

Excerpt:

“When GDP is at odds with everything else you know, it’s time to pay to attention to everything else, rather than to GDP,” Crandall said in an interview. The first quarter was not weak, he insists: Payroll growth was the best of the recovery, the Institute for Supply Management factory index hit a 27-year high, manufacturing output was strong, business and consumer confidence were up, and profits were “exceptionally strong.”

Crandall said the quarterly GDP figures are often painfully at odds with reality. Putting the national accounts together is a daunting enough task on a yearly basis, but it’s just about impossible to measure quarterly changes.

http://www.marketwatch.com/story/making-the-trend-your-friend-2011-06-10

In this case, let me highlight one of the middle paragraphs:

Blake LeBaron, a finance professor at Brandeis University who has extensively analyzed various technical analysis strategies including moving averages, says that there is the distinct possibility that something has permanently changed in the financial markets that largely eliminated the moving average’s potential as a market timing indicator.

What might that something be? Prof. LeBaron speculates that one culprit might be the 200-day moving average’s increasing popularity. As more and more investors begin to follow a system, of course, its potential to beat the market begins to evaporate.

You might recall I brought up the above 'distinct possibility' 1-2 years ago. Look, I'm not saying that I've stumbled on any game-changing insights. No, I'm just highlighting a real-life strategy: if you want to get ahead of the crowd, tune out the talking heads, and listen to the quiet guys in the corner doing the real thinking.