WORLD'S GREATEST TRADER ON WORLD'S DUMBEST TALKSHOW

Posted by Sean Doyle, Feb. 26, 2010

DATA POINT-LESS

Posted by Colin Doyle, Feb. 26, 2010

It seems that more and more these days, we are seeing economic data that fails to provide an accurate representation of just how bad things are. The reliability of the data provided through any statistical agency associated with the government, or the federal reserve, is suspect to say the least. It doesn't take the smartest guy in the room to understand the motivation to filter data subjectively in order to create the illusion of a brighter economic environment. This can be expected as the government tries to claw its way out of a very severe recession, by producing figures that will support the assertion that government, and central bank measures have in fact succeeded in stabilizing, and returning the economy to growth.

So with such heavy handed manipulation involved in these data points how should they be interpreted from the prospective of a trader? Are they in fact pointless?

one thing I have learned, is that when numbers are announced, good or bad, the market will rarely ever act according to logic. Economic data points are merely events to be traded around. The specific number, unless it is so grossly out of line with expectation, is simply not that important. Rather it is the event that is important. The day, the time, and how the market has been moving relative to the last few trading sessions and right up to the moment the number gets dropped. As a trader I find these are better items to focus on in order to speculate on how the market will behave once a number is released. Let economists dig through these murky data points to decipher the deeper meaning, because in the meantime the market is moving and setting up its next dummy trap. Focus on what's important.

I've always been relatively agnostic as regards fundamental data because of its lag, high potential for inaccuracy, and all the dueling economic philosophies. When it comes to trading, it is a huge mistake to get caught up in a specific data point unless it's relevant to your specific instrument. Especially now, in the current environment, where I see these numbers pushed further away from any utility for speculation, to serve a recovery agenda. The specific details of most government data points are useless in forecasting immediate market behavior, and that is, after all, what a traders job is.

STUMP THE KRUG!!

Posted by Sean Doyle, Feb. 26, 2010

On Tuesday, I joined an online chat on the New Yorker website with Nobel Prize winning economist Paul Krugman. I was lucky enough that he accepted a few of my questions for answering.  This one is on marginal tax rates. I have always been curious where a liberal economist would draw the line on the top rate. His answer below is artful but not exactly clear...