Figures
“One can’t say that figures lie. But figures as used in financial arguments, seem to have the bad habit of expressing a small part of the truth forcibly, and neglecting the other part, as do some people we know.” —Fred Schwed Jr. (“Where Are the Customers’ Yachts?”)
Stock market indices began the month of June off on a positive note. The S&P 500 was up 1.32% during the week, and the Nasdaq rose 2.38%.
We live in a world of financial adjustments. Companies adjust earnings to make their businesses look better—often in such extreme ways that one might mistake a bad business for a great business if one doesn’t dig in deep enough.
Investment bankers adjust earnings to make valuations and balance sheets more attractive to potential bag holders investors.
And people—investors and speculators alike—adjust the stories in their heads to make the numbers they see match what they already believe to be true.
And then some people make up stories about what one speculator might say or do to cause a price to go up higher for a bit, then a bit higher, and hopefully a little higher after that, as we saw with the return of the meme stock headlines this past week.
Market indices are hard to beat. However, the stock market will never be fully efficient thanks to the human factor governing its participants—and the emotions those humans can’t seem to keep from causing a little madness from time to time.
“It seems that the immature mind has a regrettable tendency to believe, as actually true, that which it only hopes to be true.” —Fred Schwed Jr. (“Where Are the Customers’ Yachts?”)
“What a man wishes, that also will he believe.” —Demosthenes
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