Tuesday, March 27, 2012

Numbers...ohhh look at all the sprinkles!




There really is no black and white.  I mean yes there is black and there is white, I'm not arguing that the colors don’t exist, just that there are no "absolutes."



I'm referring simply to the fact that in my experience, it can be both dangerous as well as little arrogant to deal in absolutes.  There is a lot more grey area in the world than black, or white.

I prefer to live in the camp where there are infinite variables and limitless possibilities.  The “never say never” paradigm.  Even in a numbers laden, right or wrong filtered industry like finance, it has been my experience that although 5 is always 5; the interpretation of that five is dependent upon the perception of the receiver.  Five is 5 yes, but whether that 5 is good, bad or indifferent is an altogether different conversation.  One that I like to engage in, frequently.

With this being an election year, occurring after a period of economic uncertainty and market turmoil, on top of a teetering world financial crisis and unstable political climate in the Arab world with the kicker of rapidly rising fuel prices…five is never ever just 5.

I have read countless articles, by teams of economists and financial "gurus" over the past several years trying to keep ahead of the curve and keep my CU on the right course through all of this mess,  and all of them want to explain why they have a corner on the “real picture” market.  They each have their own spin on the facts and the figures and each wants me to believe without a shadow of a doubt that they have the “fiveiest” 5 out there and that the rest of the pack is just trying to paint their 3s to look like a five.  They are all experts.  They are all speculators.  They are all wrong most of the time.  And you know what, that is just fine by me.  Numbers are not absolutes.  When the “facts” are given, even by the world’s foremost economists and big brains on the global this or ratio of that, they are merely spouting off their spin on the data.  Data that most likely they have been given by a mathematician somewhere in a fluorescent lit cubicle in the back of an office complex who is dealing solely with the numbers, formulas, forecasts and fives that they are given by even more mysterious sources.   They don’t really know or care what the numbers represent, or why the expert needs them.  They can interpret ratios and percentages to lean toward whatever side the person paying for the research would like.  Five may indeed be half of ten, but it is only a third of 15…better get 5 more responses…

So, why bother to write this rant on the process of producing preposterous percentages for political purposes and perpetuating them to the populous?

1.      First off, I just spent 45 minutes of my life reading a journal article from an industry expert only to look for the research at the end to back it up and found that it didn’t exist…literally, there was NO research to back this "scholar's" article.  At all.   I needed to vent.

2.      Second, I am tired of hearing the talking heads of network news inaccurately regurgitate “facts” today that I read a month ago

They don’t understand what the numbers mean.  They don’t know where they came from.  Most importantly…they don’t know what they should do about them,  any more than you or I do BUT they know that the more you hear them over and over again, the more they become reality.  Take for instance the rumor of $5.00 gas. 

What was proposed, speculated and anticipated by some economists last fall is now $1.001 from becoming a reality.  It may very well be reality soon, my bet is just before my family and I pack up our 12 mile/gallon SUV to drive 1000 miles south for vacation this summer.  Oil prices are by nature speculative and thus mysterious in origin.  Ripe for the talking heads to spin.  The price is as much dependent on people’s perception and political pressure as it is on supply or demand.  When the experts tell us over and over that prices will go to $5/gallon by June, by golly who are the oil barons to prove them wrong.  They have already planted the seed in our heads, they have already greased the wheels and we have already had 6 months to moan and groan.  All of this so that when they DO decide to raise the price, we are already well enough conditioned to it that we won’t raise a fuss.  Not too much of one at least.  And hey, if this fuel price spike happens to play into a certain political agenda to boot.  Well again, who are the oil barons to keep the wheels from spinning?

It seems like the more information that is pushed out there to the public and the more readily available that information becomes, the less we care about its accuracy or significance.  I can check CNN Money every 30 seconds on my iPhone and follow tweets from top economists, but they don’t give me more than a sprinkle on a much much larger cupcake. 

We have become all too satisfied with the sprinkles.  In fact we demand the sprinkles.  Leave the cake to the experts we say.  But what if the "experts" have decided they like the sprinkles better too?   

This is some very scary desert we are almost eating.

It’s like me talking about sports.  I was an athlete in high school and an active participant in all sorts of competitive recreation in college, but I have never really enjoyed the spectator side of collegiate or professional sports.  I like watching an Ohio State football game when I get the opportunity to, and I enjoy the actual playing of sports, especially with my kids or family, but all of the people who can rattle off every statistic from every random team and expect you to chime in like its just common knowledge, they just annoy me. 

Now…that being said, during football season especially, I make sure that I catch just enough of Sportscenter or a little sports talk radio now and then to know the basics of what is happening out there in the wide world of sports so that when approached by one of these amateur statisticians, I can hold my own and fake my way through a 5 minute conversation.  Why?  I think it has something to do with me feeling that I have to know something about sports to be considered a real man in their eyes.  I brush up so I can “man up.”   Now, what scares me about the “expert” economists is that many of them do the exact same thing. 

When CNN or Fox contacts someone whose name appears on an “expert list” and asks them, “Would you like to be on National television, touted as an expert in your field?  We just need to know if you are an expert in the area of tea prices in China…”  Guess what, even though they have never been to China and don’t even drink tea they suddenly realize that the decades of research that they have done in the area of funding issues and overpopulation of prison systems in economically depressed counties in the Southern US relates PERFECTLY to the price of tea in China.  “YES, of course I can speak about that, it is near and dear to my heart…” ( just give me time to Google it ) 

Numbers are numbers, but they are almost never black and white, even if 5 is five.  Numbers can be spun, twisted, baked and whipped up to be whatever flavor you like, but if you want the truth, the real flavor of the cupcake...well you are just never going to know until you look deeper than the sprinkles.