On Assumptions

Anyone who says anything about this market says so with certain assumptions.
Aim to unweil these assumptions if you want to interpret what they say.

If someone says the stock market now is cheap, they assume this is not the end of the world.
They also assume that we will not see a Japan like scenario where the stock market is now on 7000 down from 38000 20 years ago, it has never recovered.

Assumptions stem from beliefs but also biases, temporary or systematic biases. If you work for a stock broker, you are biased towards bullisheness and making transactions. No analys in a major house who says “sell all and stay out” gets to keep his job for long, this is why we personally never went to work for such a house – we would be asked to leave before long. Allways adjust for biases.

So there you have it, when adjusting for assumptions and biases everything is seen in a new light. Every word your read and hear becomes a riddle to solve and then to interpret what it really means.

Hans Lysglimt

Share
This entry was posted in Økonomi. Bookmark the permalink. Both comments and trackbacks are currently closed.