The "Intelligent Investor" (also known as Jason Zweig) has published a column in The Wall Street Journal with a headline steeped in realism. Here it is: "You’re Not Paranoid. The Market Is Out to Get You."
I am pretty much a market skeptic, myself, and I enjoyed the column. I recommend it to you, and I specifically endorse its words of caution!
The discussion excerpted below, though - not the cautionary words about market speculation - is the reason that I am bringing Zweig's column to your attention today:
Own a soaring stock you can chat about online with thousands of other people who love it, and you’ll feel you belong to a pride of lions. Own a falling stock that nobody wants to touch, and you’ll feel like a skunk at a garden party.
Starting in 2020, swarms of investors coalesced on Reddit, Twitter and Discord to pool their buying power and drive up the prices of such stocks as AMC Entertainment Holdings, GameStop and Bed Bath & Beyond. A few leaders and early birds made huge profits.
Yet crowds aren’t always right, and their errors are contagious. What separates the wisdom from the madness of the crowd?
In 1907, the statistician Francis Galton described a contest at an agricultural fair in which nearly 800 visitors tried to guess the weight of an ox. Although many knew little or nothing about oxen and their guesses varied widely, their average estimate turned out to match the weight of the ox exactly.
Galton’s guessers had a variety of viewpoints, sought to win a prize for accuracy, didn’t know other people’s estimates and had to pay an entry fee. The sponsors of the contest collected and tallied all the guesses.
The judgments of that crowd were independent, confidential, diverse, incentivized and aggregated—and, therefore, remarkably accurate at estimating simple values (emphasis added).
Let me suggest that we consider the phenomenon just described from the perspective of "politics."
Isn't it true that our politics should celebrate, as opposed to trying to eliminate, different perspectives and different views? When we talk about, and generally deplore, our "polarized politics," we are talking about a political environment in which efforts are made by opposing forces to "eliminate" divergent views - and to crush and exclude those who hold them. This happens from "both sides." We see this tendency in our political discussions, in our political campaigns, in the pronouncements of our soon-to-be-president, and in the political process that goes on in the Congress, and in other legislative bodies at the state and local level.
Efforts made to eradicate or obliterate divergence from a view deemed "correct" leads to an impoverishment of our politics, not the opposite. Wiping out the opposition, rather than trying to accommodate and reconcile with it, is a shortcut to error.
And sometimes the errors propagated by our "politics of opposition" are deadly. The politics of the past year is a model, I think, of what we need to avoid.
Can we ever have a politics based on the kind of effort at reconciliation that Galton described in a different context, in the effort to guess the weight of an ox?
Considering the past year of politics, and the year to come, I think we'd better figure out how to get there!
No comments:
Post a Comment
Thanks for your comment!