Even Fund Managers Say Occupy Wall Street Is Right
NEW YORK (TheStreet) -- After spending a week in Boston hanging out with the thought leaders of fund management at an industry conference, one thing shocked me. Top portfolio managers are not opposed to Occupy Wall Street (OWS).
Why? OWS is all about the wisdom of crowds versus the madness of mobs seen on Wall Street. In Boston, not a single person I talked with was negative about this leaderless revolution. Let's break down why we can't ignore what I suggest is rational behavior.
Francis Galton was the father of correlation, regression to the mean and crowd sourcing for data. In 1909, he noticed at a county fair that when 800 people were asked the weight of an ox, the mean of all responses was 1,197 pounds. The ox was 1,198 pounds! Nobody nailed it, and the answers were all over the place, but each wrong answer canceled out others for a reasonable consensus. This is the wisdom of crowds. It's why the market is always right most of the time -- until it's famously wrong. Trend followers can't survive without this behavior.
This is what is happening on the streets of American cities right now. People somehow figured out that Wall Street was violating the basic rules of diverse opinions that led us down the path of the subprime meltdown. Here's the short list that proves my point.1. Is there diverse opinion? Wall Street is a bunch of BlackBerrys crowding each other's trades. OWS is a bunch of people ranging from fed-up bankers to bums, all working on a vague question of how to make capitalism work. Nobody really knows what he or she is doing, which is the magic. Wall Street suffers from arrogance of certainty. 2. Are there independent thoughts? Wall Street has long suffered from groupthink. Even contrarians huddle together. OWS doesn't have the clear leadership to fully influence a single way of thinking. Let's hope it stays that way. 3. Decentralization? Sorry, but the globalized financial market is decentralized only in location. Everyone is a global macro trader these days. When my stock-buying decisions are influenced by credit spreads in China, we have centralized markets and thinking. OWS is national. People from all walks of life are taking their local experiences to help the movement grow and prosper. 4. Aggregation? What the hell was the flash crash! If Wall Street was aggregated, we wouldn't have bedlam when a black box sucks liquidity out of the system. There are dozens of dark pools and alternative trading networks that execute a single crowded trade. That is a problem. OWS has a host of outlets to spread the average mean of rational thought. I don't have to be right, and you can think for yourself. That's what OWS is about. There is a united front questioning the system. My take on it is: capitalism versus corrupted finance. Save finance and you save capitalism. Add this idea to the pile of votes and find the mean. We can all come up with the answer.
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