The Hindenburg Omen
ambro51
Posts: 13,959 ✭✭✭✭✭
0
ambro51
Posts: 13,959 ✭✭✭✭✭
Comments
Taken from here...
Moving on, the other expert WSJ turns to is Barry Ritholz. Ritholz also does a heavy "analytical" attack on Miekka's indicator. He tells WSJ that it is "recession porn". Thinking that Ritholz has a desire to get in the paper and so threw out a sound bite for WSJ, and has his real analysis at his website, I turned to his web site to see the deep analytical work behind his classifying the Hindenburg Omen as "recession porn".
His complete analysis of the Hindenburg Omen is a chart that shows the term trending up in Google trends. I am not making this up. Yup, because the economy is clearly in the tank and people are trying to learn about the "Hindenburg Omen", Ritholz disses the indicator because, get this, 280 people searched for the term. You are more likely to run into someone suffering from kuru disease than you are someone who has searched for the term "Hindenburg Omen".
Ritholz is trying to indicate that because a term has become "popular" (Apparently he considers 280 searches popular) that the rule of thumb that being on the opposite side of crowds should be kicking in. Of course, any trader who has traded more than a week knows that crowds can grow very large and that they can take a very long time to reverse. Even given Ritholz's absurd implication that 280 searches in the sea of investors is a crowd, the crowd indicator as far as timing is concerned is a terrible indicator. Cash flow into the market, new highs and lows and current momentum (all part of the Hindenburg Omen) tell you a lot more. Thus, WSJ is really quoting Ritholz using a very weak indicator (the weakness amplified by the absurd tiny size of the "crowd") to diss the Hindenburg Omen which is rich in valuable data. Amazing.
Who knows if WSJ reporters have an agenda or are just clueless, from experience I know that most reporters love sound bites over analysis. There is nothing necessarily wrong with a sound bite, as long as there is analysis behind the sound bite. Ritholz has none and Siegel can't even get the direction of the economy right.
I have long been a preacher of being very careful of empirical indicators. You need to know what is behind the indicators (which I did for the Hindenburg Omen here), but you also need to know what the analytical work (or lack of it) is behind the "experts" WSJ quotes. There's zero analytical work by the "experts" in this WSJ article.
Lists recent occurrences in the article.
Great name, just like "Titanic".
Free Trial
The Mysterious Egyptian Magic Coin
Coins in Movies
Coins on Television
If that 20% impresses you then remember that a bad clock tells the right time twice per day.
Much ado about nothing.
Authorized dealer for PCGS, PCGS Currency, NGC, NCS, PMG, CAC. Member of the PNG, ANA. Member dealer of CoinPlex and CCE/FACTS as "CH5"
<< <i>1/4 >>
I agree...
where's the chimpanzee to bring sanity back to the martplace....
He's not the only one predicting a big crash, though.
The employment numbers scare me, not for the short term, but for the long term.
Mark
Discover all unpredictable errors before they occur.