Tuesday, 16 March 2010

Blogging is Hard, M'Kay?

This post was written in spurts over a week-long period. If it appears more disjointed than normal, it's due to my train of thought constantly being shunted into sidings to allow more important traffic through.

Actual title during the draft: If Only Everyone Would....

I am not a fan of John Lennon. His supposedly inspiring songs "Imagine", "Give Peace a Chance" and the "Happy Xmas" Christmas song make me want to retch.

It's not the message of hope and peace that I mind, it's the "if only everyone wasn't religious and selfish" pining that irritates my mind. Yeah, yeah, it would be nice if everyone would choose to live in peace and harmony with each other. But if wishes were ponies we'd be neck deep in manure. There's practical means of establishing peace and harmony, and then there's childish wishing. John Lennon falls into the latter camp.

On a related note, I am equally annoyed whenever I participate in discussions about investments. You will experience the same attitude of "if only everyone would."

Mention that your investments are not doing well, and you will immediately get advice that you must regularly

  • "re-balance your portfolio; if everyone did that, no one would have issues".
  • "sell when everyone else is buying, and buy when everyone is selling"
Even Andrew Coyne fell into this trap, when he mused that everyone should just invest in index funds (in the comments, not the article).

The problem with these thoughts is they ignore the fundamental nature of the stock market. Any trends that develop are a product of the chaotic and seemingly random actions of the investors. If investors were to en masse change their actions, they would change the very patterns that are currently observed. Call it Quantum Investing. Simply, everyone can't sell while everyone is buying. Also, If everyone invested in the index, well then companies not directly related would fall, and the intangible relationships between them would cause the index related companies to suffer. Think publicly traded automotive parts manufacturers that are not in the index. If they cannot raise funds on the market, they will suffer. If parts suppliers fail, they affect the major car makers on the index, either through lack of parts or the lack of competition to make those parts. End result, the value of the index is unexpectedly changed.

Humanity's desire to impose order on the world around us, to control and influence outcome can manifest itself in strange ways. None stranger than dictating what "everyone" should do in collective action.

UPDATER: Wherry takes a whack at this theme regarding our angst over the lack of civility in parliament. Mea Culpa on my part, since this is a topic I've expounded on, wishing "everyone" in parliament would behave better.

Not a lot to show for a weeks effort eh? At some point I should find more time for this. Right? RIGHT???

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