The Prophecy Business

The card dealer at a casino doesn't claim that he knows something about the order in which the cards will come up. He just makes sure that the bets are properly paid and the house isn't being ripped off.

However, it is hard to find a market participant from the almighty CEOs to the lowliest of clerks who is willing to be just a card dealer. For one thing, customers have an unfortunate tendency of asking about what markets will do in the future. The self-glorificating mentality prevalent in the market will forbid any participant to give the simple answer of "I don't know". For then, one will surely be laughed upon, sniggered and despised. That in itself, is bad for business.

Some people have made the prophecy business their very livelihood and there is no denying that in general, their accuracy were as good as that of a simple toss of a coin. Either it goes up or goes down (very rarely does a stock stays at a single fixed price for long). These professional coin tossers are neither mean nor devious. They do not come to office everyday and think what cock-and-bull story shall I invent today. These people are genuinely much more innocent, they only tell others only after they have genuinely influenced themselves about what they think of the future. The worst that can be said of these people is that they wanted so badly to convince themselves that they generally succeed in fooling themselves.

Then again, there will always be an upward bias for all these recommendations especially from investment houses. The general rule of thumb is to not say anything about anybody unless you have something nice to say. Unless one has the kind of incontrovertible evidence to the contrary, any public expression in the negative form will only attract unwanted lawsuits or ill feelings.

Every now and then comes "the era of wonderful nonsense", a delusional theme that is comparable to the fervent belief that the Earth was flat. Few years ago, the theme was that every IT company was a future money-printing machine even if it was burning through tons of cash at that time. Today, the theme was that real-estate prices for the US as a whole never came down ever since the Great Depression, implying that real estate prices are going nowhere but up. I do not profess to know what the next wonderful nonsense will be, but I do know that there will be a next wonderful nonsense in time to come. More likely than not, it is going to be so wonderful that I may fall for it myself.