NEW YORK (Real Money) --
"I don't know."
-- Jeff Spicoli (played by Sean Penn), Fast Times at Ridgemont High
We need more Jeff Spicolis in the investment business -- people who are unsure of themselves and can say: "I don't know!"
Yesterday, I came back from some research meetings and found the S&P 500 up by about 20 handles, the polar opposite of the previous day's 20-handle fall.
I tuned into the business shows for a market recap but was amused by how many self-assured market observers "knew" -- after the fact -- that Wednesday's reversal would occur.
I wish I were that smart. Although I did cover many of my shorts on Tuesday, I had no clue that the market would recover.
This commentary previously appeared in Doug Kass' Daily Diary on Real Money Pro. Click here for complete access to this dynamic, real-time market blog.
Frankly, as I've repeatedly written, the only certainty in investing is the lack of certainty. It's for that reason (and out of respect for my and my investors' capital) that I've been plus or minus "market neutral" for months now. There are simply too many possible adverse economic and market outcomes -- which makes, for me, an unattractive reward-vs.-risk equation.
I see this self-confidence of "after-the-fact" analysis all of the time in the business media, on Twitter, Facebook and elsewhere.
My advice has been constant -- avoid those who are self-confident of view and who provide ready explanations to daily market moves.
Why? Because 1) they probably aren't managing significant amounts of money (and in some cases don't have any assets at risk at all), 2) their observations are almost always "after the fact," 3) they explain the turnaround on variables that are just plain dumb (often simply making stuff up), 4) they're probably trying to sell you something instead of providing value-added investment input, and 5) they never say "I don't know."
The investment world and the media that cover it demand endless opinions that most people have limited information on. I describe this as being 3-miles wide and 1-inch deep. Sometimes the respondents just make answers up. Other times the questions and answers are simply scripted in advance and the rapid-fire responses are mistaken for thoughtful and deep analysis. (Which they're not.)
My pet peeve is the singular question that's routinely asked of business TV's "talking heads" as they parade before the media at 3:45 p.m. and 6:00 p.m. every day (and again in premarket conversations the following morning). They're always asked the same inane question: "Why did the market do what it did today?"