Daily Speculations

Cognitive Dissonance & Jobs Numbers: An Amazing Display of Cultishness (2/7/4)

"The number was announced. Instead of declining, the market rose. But it was wrong to do so. As it had been for the last 300 SP points. Damn my broker!!! Damn the operatives who manipulate those numbers. And damn the public that doesn't believe that there is a one-to-one relation between business conditions, the desire to work, the choices available, and the stock market in the first place." Vic

The moment passed in utter silence. [The flood had not destroyed the world]. Suddenly Keech's face lit up. She just heard from Clarion that the world had been saved... . Until then the group had shunned publicity and not sought new recruits. Now they handed out leaflets on street corners....  The conflict was so great that affirmation from other was now required to allay the [loss of self esteem]. -- Festinger, Riecken and Schacter, "When Prophecy Fails," 1956.

Dr. Brett, Daily Spec Market Shrink, 2/7/4: What's always so interesting to me is that cultists, unlike scientists, use disconfirming evidence to bolster their beliefs. Thus, when the market rises, it is further evidence of overvaluation and reinforces the conviction that a bubble is forming and doom is around the corner.

Comment from Steve Wisdom (2/7/4): By a quick count today, there were >15 posts on Spec list referencing the poor (un)employment numbers today. Economic-data lucubrators on Spec list have pounded the table for a year as to how poor the (un)employment situation is, in which time the S&P has risen 35%.

So when does the stockmarket go down? I'm still at a loss on this. Could future posts on (un)employment kindly append a falsifiable stockmarket prediction?

SPX 1142.76 + 14.17

SP Index Value %Chg NetChg
Year_to_Date 1111.92 + 2.4 + 26.9
52 Weeks Ago 838.15 +35.7 +300.6
 

Comment from George Zachar (2/6/4):  There's a near-religious dogma aspect to the employment threads. It's not so much the data itself that are the focus, but the notion that "America" is slipping away, in dribs and drabs, to lands across the sea peopled by those with darker skin and funny eyes.

At every turn, the data are distorted or cherry-picked to highlight some poor sap/community having its presumptive birthright ripped away by eeeeevil soul-less capital.

i know it's easy for us specs to sit around and say "globalization rocks" because *our* livelihoods are not impacted, and the tradeables in our cost of living are falling in price. Nonetheless, at "this level," that is, the highly educated/motivated/120+ IQ group, it is very distressing to see economic fallacies and simple-minded nativism still flourishing.

Comment from Big Al (2/7/4): The "Make enough broad and contradictory generalizations and you can't be called wrong" award goes to:

*****

Time to Be Choosy as Rally Stalls
Saturday February 7, 7:24 am ET
By Kenneth Barry

NEW YORK (Reuters) - First, the good news. Many large companies have just
delivered better-than-expected fourth-quarter earnings and the economy is
growing at an above-average pace. But the bad news is stocks seem to be
running out of steam.

The double-digit increases in major stock indexes in 2003 have given way to
paltry advances so far this year. In January 2004, the Dow Jones industrial
average rose a mere 0.3 percent.

Are the good times over for Wall Street? Is it time for equity investors to
pull back? No, say some money managers.

*****

And talk about choosing your facts carefully: What's more significant: that the Dow rose only 0.3% in January, or that the S&P 500 is up 2.7% YTD?