Psst. I Wanna Tell Ya A Secret

When I was in the investment world, I didn't understand, maybe, let's say 50% of the crap and jargon I heard and read. Funny thing is, I betcha it was the case with most of my colleagues. The only thing they mastered was the art of their pitch. They managed to bury themselves in the set narrative and believe that somehow nonfarm payrolls had a significant impact on how they chose stocks.

All an illusion of expertise.

Every some morning we had to watch the figures come in, GDP, CPI, GTI, CIA, whatever. Sure, it was information but it was, on average, useless. You can write down in your copybook all these stats and still it told you nothing.

"Hey Commentator, how 'bout those durable good numbers, eh?"
"Yeah."
"What you gonna do?"
"Wait for the softer numbers. You?"
"Dunno. I already churned my accounts."

The other thing I discovered early was the uselessness of listening to analysts. Smart people so well-versed in their jargon. I never knew what the heck everyone was talking about. I got the sad sensation that maybe either I didn't belong or I was just the only one to admit to myself we're all tricking ourselves.

Those analysts and all their rational dissection of stocks with quirky terms like EBITDA (earnings before taxes, depreciation and amortization. Each time they'd say EBITDA it was akin to someone scratching their nails on a chalk board. I came up with EBITDATVD - pronounced EbitDavid or earnings before taxes, depreciation, amortization, tea and verbal diarrhea) made me laugh. Problem is no one was laughing with me.

So EBITDA for the quarter...
*Commentator breaks out in laughter. Pounds fist into mahogany table*

That's another thing. Quaterly figures. We lived and died by quarterly earnings. We'd judge a business every three months. Dunno 'bout you but that made about as much sense as Paul Krugman.

Speaking of which, he's a nice addition to this discussion. How a man can write things that basically add up to "you need to spend more to make more because that's how it's done" remotely be recognized as an expert? Oh, he has that Noble Prize. So-ree. Mr. Shmart. He must "know" something we don't.

They don't.

Just like the CEO's who are made out to be "visionaries."

Prizes and awards (not all admittedly but I'm guessing a majority here) are just confirmations of our superficial narrative.

Almost always we'd follow the analyst's advice and the stock would....drop.

Bummer.

In the boardroom it was even more hilarious. What you realized in the boardroom was that these guys weren't experts. They were salesmen. The firm tried to bring some sort of professional chic to it but these people were one stepped removed from selling vinegared turnips.

Only difference is they made a lot of money for their illusions. Most successful brokers were very, very lucky. Of course, they'd tell you stories of how "they pounded the pavement eating just the top of the muffins in Tim Hortons back alleys" to get where they were at. Indeed, that was the case for some but for most either they got a friendly push, knew enough people and were plugged or were at the right place and the right time as was the case with some guy in my office when his partner croaked and left him with the entire lucrative book. I would probe my own partner and discover he too was more thanks to the economic climate than anything he amassed so many clients. At least he admitted it - "It was easier back then. I was lucky" -  even though he'd conveniently forget I knew this when he'd pull his own "Tim Hortons" bull.

Isn't that usually the case?