Never Mind What the People Think
November 1, 2004
I sit here on the eve of America's "greatest election" in many moons feeling obliged to write something appropriate for the moment. The market has not really been doing much as it too waits in trepidation for America's next President. Sure, there have been isolated moments of excitement for both bears and bulls, but, overall, the main downtrends of 2004 are safe and sound. And as I listen to pundits huddle around the fire and whisper stories of market glory once this latest uncertainty passes, I cannot help but think back to the promises of these same seers back in June of this year. Back then, the market was supposedly troubled by all the uncertainty surrounding the transition of authority in Iraq slated for June 30th, and the dawn of a new Fed that would finally get more stingy with the green. Sure enough, the uncertainty got resolved, and the market obliged us by selling off swiftly.
There is no telling what the market will do this time around. The market is hiding its hand relatively well. There are enough signals for almost any interpretation to make sense. So, instead of making yet another prediction, I will address the latest thing that is annoying me with the presidential race (and yet still has relevance to market commentary!).
Bushie has stated countless times that he does not govern by polls…that he pays the polls no mind…that he will never poll the world to decide our security, etc… Bushie is certainly not alone in this. Most politicians love to profess a disdain for polls - at least until the polls agree with their own opinion and desired course of action. Who would trust the polls anyway? The pollsters pester 1000 or so "representative" Americans, somehow calculate a +/- 3.5% margin of error, and claim we are now more informed about the remaining 290,000,000 or more Americans. So if politicians do not listen to polls, where do they get that magical sensibility for what the American people think, want, and need? They are not doing their own polls: couldn't trust those. They are not calling up and directly asking us. Many important elections are statistical ties. That is, when the winner garners 48% of the vote, and the loser takes 46% or 47%, you might as well flip a coin! Finally, the only people the politicians really talk to are other folks who either agree with them - their staff, their supporters, and various other admirers - or they debate people in the halls of government who diametrically oppose them and are thus automatically considered 100% wrong. We must then conclude that our politicians usually have no real clue about the nature of the true pulse of the country.
So, never mind what the people really think. As long as you can surround yourself with enough folks who agree with you, you can proceed in full confidence that the rest of the nation supports you as well.
And what does this have to do with the market? Well, imagine investing in the market with a complete disregard for price. Price is the lifeblood of the market. It is the primary source of communication of trade. It is the real-time poll of marketplace opinion. Can you imagine having much success in the middle of the market's chaos by only paying attention to market sources that agree with your opinion? Can you imagine having much success betting that the market will always agree with your opinion? I sure hope not! Now, let's tell the politicians the same.
Go VOTE, and be careful out there!