Giving the People What They Want

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When it comes to stock markets, big firms like Goldman know better than anybody to give the people what they want to see. Witness, this slide:

It’s not crazy, it’s a path the market could conceivably follow, but a closer look is instructional.

  • Note how it isn’t simply a line up and to the right, there’s no obvious profitable action to take on a forecast like that. Something like this, well certainly.
  • It has an ‘up’ component built on “hope”, so if it doesn’t materialize, we can chalk it up to the markets being surprisingly rational, not our forecast being wrong.
  • The numbers and timelines are conveniently round, simple to interpret for ever the layest of laymen.
  • If the market goes up (most likely), goes down 5% at some point in the next 12 months (also most likely), and resumes the climb, success can more or less be claimed.

This chart is beautiful, if only for its ability to inspire the average day-trading dentist or pension fund trustees.

Before we leave, let’s take a look at a couple of other ads on the page and appreciate them for what they are, a dazzling ode to confirmation bias:

Like an eclipse, I recommend not viewing these kinds of things directly, they will blind you. However, if you must take a closer look, bring #14 welder’s glass or a pinhole camera.

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