Artful Investing

Returning to Max Gunther's The Zurich Axioms it's the turn of the fourth Major Axiom, dealing with the nagging pestilent presence of the forecasts of others.

Major Axiom IV:
Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.

Unfortunately, wannabe cassandras, quack clairvoyants and boys that cry wolf are legion in the business media. Their opinions (however weakly held) are communicated with the conviction and persuasion of a professional. Their prognastications, pontiffications and punditry must be avoided with the determination and diligence of a Parisian pedestrian with a compulsive obsession for clean shoes.

Gunther explains the reasoning behind Axiom IV:

We listen, no doubt, because knowledge of the future is and has always been one one of the most desperately sought human goals. If you could read tomorrow's stock prices today, you would be rich. And so we listen with respect and hope any time someone stands up and announces a vision of things to come.

More often than not, listening turns out to be a mistake.

The journalists and economists rife throughout the business sections are often forbidden from holding stakes in the companies they pass judgement on, they earn their living from commentary and dissent - their role is peripheral to the main attraction. They posess no proven ability beyond the literary and amount to nothing more than parasitical pimps, taking a salary while those with the real courage of their convictions take the risks.

Forecasters are particularly dangerous because they often operate a hidden agenda. This can be increased stockbroker commissions from trades inspired by their recommendations, or simply the need to cobble together an article for the print deadline. There is usually little money to be made should the verdicts even be proven correct as market prices already reflect the majority opinion, only analysis so left-field and rarely held can produce significant gains.

There are no silver bullets, crystal balls or magic goat entrails to enlighten the stock market investor. Ignore the so-called soothsayers, give them no more attention than opera-goers give the choc-ice vendors at La Scala.

The Artful Dodger