Scribbler's Macroeconomic View
TSP Newsletter Claptrap, Economist Claptrap Can Both Hurt
by , 02-21-2009 at 01:30 PM (3618 Views)
The January/February TSP newsletter arrived in the mail a few days ago. Many of you probably received it as well "TSP Highlights" and the letter from TSP accompanying the annual statement.
In my opinion, both are complete and utter rubbish. Take Highlights -- which exults the benefits of dollar cost averaging as a method to mitigate risk. This proposed risk mitigation strategy has been an immense failure -- but the theory need not be based on observable fact, but on mere faith. It is as if the market were a gambler, and the investor were the casino -- after many iterations, the probabilities are on your side, so pay no attention if you lose in the "short term". It is nothing more than espousing a philosophy of laziness, and it should be treated as such and completely disregarded.
I try to focus on the macroeconomy as primary driver -- which it is. The macroeconomy drives revenue lines which is directly reflected in profitability of corporations. But I have become extremely disenchanted with major insititution economists. Rather than the logical progression of economic factors affecting business conditions, and therefore profitability, economists from major institutions seem to focus more on projecting an economic scenario that makes the recommendations of that institutions stock analysts seem viable. Not a new problem, I know -- but it has become more bothersome to me recently. It is troubing to see projections that are not based on evidence stir up people into investing for the turn, only to see them lose another 9% in short order.
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