> Two days later, a team member with experience in finance saw that the hryvnia was strengthening amid events he’d thought would surely weaken it. He informed his teammates that this was exactly the opposite of what he’d expected, and that they should take it as a sign of something wrong in his understanding.
This is an experience every young trader ever has had many, many times. Myself included. You see an economic figure, you think "hey this should do x", and it doesn't do what you think. The senior trader on the desk will remind you that your wrongness is worthy of further thought.
Keep in mind that prices are themselves predictions. You are predicting what people will predict.
If you're wondering why the talking heads get things wrong, it's mainly because they are talking heads. They're paid to say something interesting, not to make money betting on it. That includes the banks' own analysts! They don't have money on the line, they are sales people at core. I've personally had conversations where the same guy will tell me to buy AND sell the same thing (USDJPY in that case). As long as I do it with him.
But mainly the guys making pronouncements on TV are there to get themselves another slot on TV.
The talking heads point is deeper than that. Not only are they paid to be interesting.
The very ability of being good at talking might be co-related with other base attributes.
For instance being good at talking might be co-related with tunnel vision, not having a bigger perspective, being able to connect things which shouldnt be, naivety, empathy and so on.
So if your process of conferring the title of expertise involves going through the university system, or performing well in debates or on a podium, you will get experts who are all wrong in exactly the same way and there is no one to offer them a different perspective.
> For instance being good at talking might be co-related with tunnel vision, not having a bigger perspective, being able to connect things which shouldnt be, naivety, empathy and so on.
This is a good point. When you really understand something, you know what the limits are. Your mind is full of ifs and buts.
People who are good at talking, especially persuasive talking, tend to be so because they can articulate a clean vision with few wrinkles. Think of any political discussion. In reality there's a tradeoff between higher taxes and higher social services. You end up getting people who essentially argue that it's a no-brainer, one way or the other depending on their flag.
The candidates do write books. One politician here is known as one of the "thinkers". In his books often times a problem is shown from many angles and his position ends up on some balance point. For example he might consider taxing wealth more and (salary) income less.
> The senior trader on the desk will remind you that your wrongness is worthy of further thought.
George Soros has written a bit about this effect (about back when he was a trader).
From recollection -
Firstly he enjoyed finding his investment hypothesis turn out wrong, and he eagerly looked for errors. He stated that some of his biggest wins came almost directly from a previously faulty idea.
Secondly he hated giving opinions on any market to anyone, since he felt that the social pressure to be correct hindered his ability to recognise mistakes and change his ideas.
> This is an experience every young trader ever has had many, many times. Myself included. You see an economic figure, you think "hey this should do x", and it doesn't do what you think. The senior trader on the desk will remind you that your wrongness is worthy of further thought.
This is an experience every young trader ever has had many, many times. Myself included. You see an economic figure, you think "hey this should do x", and it doesn't do what you think. The senior trader on the desk will remind you that your wrongness is worthy of further thought.
Keep in mind that prices are themselves predictions. You are predicting what people will predict.
If you're wondering why the talking heads get things wrong, it's mainly because they are talking heads. They're paid to say something interesting, not to make money betting on it. That includes the banks' own analysts! They don't have money on the line, they are sales people at core. I've personally had conversations where the same guy will tell me to buy AND sell the same thing (USDJPY in that case). As long as I do it with him.
But mainly the guys making pronouncements on TV are there to get themselves another slot on TV.