One of the more interesting aspects of life is the juxtaposition of absolute conclusions. I find it interesting when people form conclusions based on anecdotal data, limited data, or no data at all. The latter is the most interesting because these folks will argue their opinions as conclusions derived from data. What is even more interesting is when two people draw opposite conclusions based on the same data. This suggests to me that some data is 1) open to interpretation or 2) is misinterpreted.
This is interesting unto itself, but what I find most interesting is the absolute nature of the conclusions based on data open to interpretation. For example, the reader below has based his conclusion on data open to interpretation, but note how absolute his conclusion is. He is referring to my column yesterday. I theorized wages would rise as unemployment lessened and, therefore, inflation would rise.
- Your thesis is flawed. Wages won’t go up dramatically because of technology and, globalized wage pressures. Inflation will be tame for a long, long time, infinity and beyond.
I have no argument with his basic premise. He might be right, even if I thoroughly disagree with him based on the data I have examined. Wages will rise precisely because of technology and globalized wage pressures.
As technology roots deeper into business, business will require more highly educated people to manage, operate, and repair that technology. This will necessitate paying higher wages, as those with the appropriate education can and will demand higher wages. Think supply and demand.
As global wage pressure increases, wages here in the US will rise. Think basic economics. For example, for quite some time, China has been a source of cheap labor. Many US businesses in the last three decades moved their business to China to take advantage of that cheap labor, thus putting downward pressure on comparative wages in the US. Today, many of those businesses are coming back to the US because of upward wage pressure in China. That is my summary case.
Regarding his absolute conclusion, “Inflation will be tame for a long, long time, infinity and beyond,” I can only say, whatever his data source, it is flawed. Current scientific data tells us infinity itself is, well, a really long time. That alone makes his conclusion suspect. However, the greater flaw in his conclusion is: What data supports a timeframe beyond infinity? Just askin’.
Teasing aside, my point as it relates to the market is: One should be careful about listening to those who present absolute conclusions, especially since we all have, for the most part, access to the same data. Market data is open to interpretation, and often some misinterpret it, myself included.
So, when an “analyst” talks about a market in absolute terms, your alert system should go off. Now, it does not necessarily mean the analyst is misinterpreting the data or trying to deceive, although both possibilities are possible, it simply means you should check it out for yourself. The analyst might be right, as good ones often are, but be careful about taking that for granted.
Trade in the day; Invest in your life …
