Wall Street: Dumb as It Ever Was

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 |  Includes: DIA, QQQ, SPY
by: Todd Kenyon, CFA

StupidWS

I had to take a few moments away from shouting at the circus-of-the-inane on CNBC to vent. All the focus on this jobs number this morning should confirm to any rational person that the great majority of what goes on in Wall Street is a complete waste of time at best and a criminal destruction of value at worst.

Being trained as a scientist in a former life just makes it harder to watch this garbage. Yesterday afternoon some random NYSE floor monkey, CNBC's "expert of the moment", expounded that if the unemployment rate came in at 9.9%, the market was going to the moon, Alice. But (God forbid) if the rate was 10%, we're all doomed. At which point my left eyeball began twitching followed by my Bond-trader office mate and I embarking on a 30 minute session of throwing things (literally and figuratively) at the TV. Only a session of cranking some classic reggae could calm us.

10% vs 9.9% - this my friends is far less than a rounding error. It means less than nothing, It is simply a round number vs. a non-round number - NOTHING MORE. And based on this alone, truckloads of money is wagered on Wall Street. Consider that today's jobs lost were 190k vs a consensus of 175k. Good God, the unemployment rate is 10.2%!!! Head for the fallout shelters! We missed consensus by 15 THOUSAND jobs. Never mind that September was revised better by 44k jobs, and August better by 46k. And never mind that the consensus is a compilation of predictions made by economists that have no better way (or past record since the beginning of recorded history) to predict the economy than the seagull circling my building. The one advantage they have is that people ASK them to predict the future, and PAY them to do so. As far as I know, no one does the same for the seagull. That is, unless he "calls" (caws?) a market bottom or top. Then he'll be guest host on CNBC for sure. The only question then will be whether a gull can out-bellow Kudlow.

Please try to remember in the face of this noise that the only good INVESTMENTS (as opposed to speculations) are those that do not require you to predict the future. And these are getting tough to find.