It had two long pieces that angered me. Usually, I let these things go. It’s a waste of time trying to play Whack-a-Mole with those with whom you disagree. But I’ll waste my time this time.
1. Here is Barry Ritholtz.
Finance is filled with colorful phrases such as “Spoos,” “Vol,” “Monte Carlo simulation,” and “Gaussian Copula.” In these columns, I try to eschew the usual Wall Street jargon. But I have used the phrase “secular cycles” (most recently here), and a reader recently called me on it. To redress that error, this week I will discuss what a secular — vs. cyclical — market is, its significance and what it might mean to your portfolios.
What made me angry is that the Wall Street jargon to which he refers has some theoretical content to it. There may be erroneous assumptions baked in, and practitioners who know the jargon are capable of making really bad decisions.
But he is making it sound as though “secular market,” and in particular “secular bull market,” is a generally accepted scientific concept that can be used to predict future stock prices. I think that this article should have at the very beginning a huge disclaimer that says “I am about to present a concept that has absolutely zero rigorous research behind it.”
Every attempt to analyze the stock market must start with the efficient markets hypothesis. As far as I know, there is no alternative that is sufficiently robust to yield strong predictions of market movements that hold up for long periods out of sample.
Note that I am not saying that I can predict the market better than he can. I am not saying that there aren’t a zillion other stock market columnists serving baloney sandwiches every day. What I resent about this particular column is his sheer pretentiousness. He is passing off his baloney sandwich as if it were expert knowledge. That is what ticks me off.
2. We Need a National Food Policy, by Mark Bittman, Michael Pollan, Ricardo Salvador and Olivier De Schutter.
They do not say, and indeed they could not possibly say, that we now have a free market in food. Among other criticisms of current policy, they write,
in February the president signed yet another business-as-usual farm bill, which continues to encourage the dumping of cheap but unhealthy calories in the supermarket.
The problem is not that we lack a food policy. The problem is that these four authors would like to see a different food policy.
The article strikes me as a classic “moral will” story. That is, experts know the right policy. All we need is the moral will to execute it. There is no acknowledgment of either the socialist calculation problem (centralized experts may not have the information they need to actually make a better food policy than the market) or the public choice problem (government as an institution is ripe for capture by interest groups).
Of course, you could say that libertarians have our own “moral will” story. We think that people need the moral will to resist campaigns to put the national government in charge of everything.