Don't Believe the Pundits

When I was in college, there was this one guy on my dorm floor, Steve, who was the certifiable expert on everything. Talk about the Yankees? "The win's in the bag."

Needless to say, Steve didn't exactly bat a thousand, but that didn't stop him from batting around his opinions.

What amazed me was how many people in my dorm at the time took Steve's word as gospel. Maybe because Steve was loud. Maybe because Steve was big. I don't know. He just seemed so convincing, so strong in his convictions that you couldn't doubt the guy if you tried.

But even back then I was not so inclined to buy his every word. Not because I was particularly prescient, but because Steve was really obnoxious, and he bugged me.

There are lots of Steves in the world today. Many of them grow up to become pundits.

Pundits like to go on and on about what will happen in the world. There are all sorts of pundits, of course - political pundits, market pundits, sports pundits, and pundits who try to out-pundit the punditry of political, market and sports pundits all put together.

Political pundits concluded only a couple of weeks ago that Howard Dean was unstoppable for the Democratic presidential nomination. Iowa proved he wasn't.

Financial pundits at the height of the market bubble predicted it was all a new paradigm for years to come. It wasn't.

Sports pundits had the Yankees taking it all the last two years in a row. They didn't.

The bottom line is that pundits are no better than you and me: They make guesses that are more often follow-the-crowd than wow-the-crowd. And they are often wrong, very wrong. But that doesn't stop their punditry. What's amazing to me is why we care about what they say.

Pundits said we should see what a big deal the Dean momentum was, that it was drawing in big endorsements from the likes of Al Gore and Iowa Sen. Tom Harkin.

Pundits love big politicos who out-politico their punditry. And they like symmetry with their punditry, so if they see Dean as the guy, they love it when those in power start to see Dean as the guy, too. Neither the pundits nor the politicos ever took a second to consider that hey, maybe the other guy's a dunce.

Just like the financial pundits who said after Enron exploded that faith in American corporations would tumble and that all companies - all companies - would suffer, as if every executive was a crook and every spreadsheet stained.

Just like they predicted the first mutual fund scandal would prompt a wholesale rejection of mutual funds on the part of American investors.

Nowhere in their dire warnings did they calculate that investors were wise enough to conclude some funds were bad and some chief executives were bad, too. But not all. The markets went up without the pundits seeing it, and the mutual fund industry carried on without any pundit predicting it.

We should expose these charlatans for who they are - tea leaf readers who couldn't distinguish Lipton from Lipitor. They haven't a clue, and deep down inside they know they haven't a clue. As we speak, they're busily re-arranging their predictions, saying it's an open Democratic race now, maybe Sen. John Kerry's race to lose now.

They're looking at the markets and saying the good times are back and it's 30 percent a year gains for as far as the eye can see.

Pundits are pundits because they can't do anything else. They can't grasp much more depth than the black-and-white figures before them, "at the time" they're before them.

They pounce on the latest poll, the latest sentiment and the latest fling to make the earliest pronouncement. They think they're Nostradamas. I know they're nothing of the sort.

The sin isn't that they go on pontificating. The sin is that we bother to listen to them when they do.

Good post. And did you notice that within hours of the reporting of the Iowa results, several sources named, with absolute certitude, not only the Dem nominee, but his running mate? Kerry/Edwards, nominated by acclamation, or so it seems.

I wonder what next week's Dem ticket will be?

What magazine used to do an annual wrapup on the accuracy of psychic Jean Dixon? Probably Skeptical Inquirer. I've always thought columnists and talking heads should have to publish a box score every year to keep their jobs. This is what I predicted; this is what actually happened.

Just a few months ago the liberals were wetting themselves over their 'man to beat Bush', Howard Dean.
Then as it became apparent that Dean had the habit of being a little loose with the facts, and losing some of his luster, the liberals, right on cue, began to tout their 'hero'...Wes Clark.
Immediately after Iowa, these same liberals couldn't shut up about how terrific a candidate Kerry is. Never mind that up to the Iowa Caucuses his name never passed thru their gnarled lips.

Currently, it isn't just Kerry that the libs exalt, it's Kerry and which other democrat that can be best paired with him, to win next November.

The liberals seem to be fickle & mercurial in deciding who exactly will be the best challenge vs. Dubya.
Then again, being fickle & mercurial is a way of life for them.

Some Dem was on TV last night saying that it would be hard for the market to "mimic the the 1965-2000 overall growth years due to a number of macro trends and demographics...."

Back in Jan. '90 some guru wrote a very convincing article all about why the '90's could not possibly be like the wonderful '80's. He was in the money magazine business, not in the investing business and he was very successful satisfying the readership's hunger for bad news. Like Rush says, pessimism is easy-- nobody needs to buy a book or take a class called 'The Power of Negative Thinking" because failure always takes so little effort.

How do stocks do over the long term? In the last 100 years, the Dow has increase 100 fold. Does anyone seriously think the US, or the world for that matter, is in worse shape than in 1900?

One other thing- plotting just the DJIA does not show the value after dividends and inflation. In other words, if you bought in Jan. 1929, you'd have recouped all within seven years if you include dividends and inflation. Now if you bought in on some other year, so much the better.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.