Lies, Damned Lies, and Statistics

Lies, Damned Lies, and Statistics

| August 04, 2016
Markets

Mark Twain made famous the quote by British Prime Minister Benjamin Disraeli: "There are three kinds of lies: lies, damned lies, and statistics."

Ain't that the truth!

A week and a half ago the  S&P 500[i], a market index of 500 U.S. stocks, closed at 2175, it’s all time high since the last time it peaked in May 2015. (A statistic, by the way!)  Yet, we Americans are still walking around with our pouty faces crying "when is the recession going to end?"  We are constantly waiting for the next roll of bad economic news to prove it to ourselves that things really still suck in the economy.

Yet, here we sit at another market milestone going the other direction. Granted, it is likely to be only temporary. The market will dip again, go up and down, and up and down, and on, and on...until it peaks again, and dips again, as it has done since the stock markets were founded.

So I'm curious who you are listening to? What are you reading? What are they telling you about the state of the economy, the markets, and the direction of our country?  And what data are they using to prove their point?  Do the answers you are getting cause you to wake up at night with cold sweats?  If so, why are you torturing yourself?

Every day, we see news reports of some tragedy, or some event that has an impact on our country and our economy. Sometimes they are big events. Sometimes they aren't so big. But why are you letting these things that usually have no direct impact on your life de-rail on your mental sanity? 

I'm not saying you need to stick your head in the sand and ignore world events. But don't let the nightly news push you to the point of mental distress, where major pharmaceutical companies offer you a board seat because your blood pressure is so high!  Calm down. Take a "chill pill" as they say (I'm really not sure who says that anymore.)

In this age that we live in, that constantly bombards us with a never ending stream of data from every direction in our lives, it is tough to turn it off.  I've had to have intervention talks with my wife because of her need to check Facebook the minute she wakes up. (It's hard to sleep with the glow of an iPhone in your face at 5 am in the morning.) 

It is no wonder we are stressed out.  We are addicted to statistics!

How do we fix it?  I'm not sure, I'll get back to you on that one.

In the meantime, go check your 401(k) balance, your home value on Zillow, and your estimated Social Security benefits, since I'm pretty sure those are accurate and truthful statistics.

 

[i]S&P 500: The Standard & Poor's (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks. All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results