Intellectual Integrity and Indicators
At "A Dash" we believe in intellectual integrity. We use an eclectic approach to find the real experts, choose indicators, and let then follow those in advising clients.
Sometimes these indicators lead us to be bearish, as we were in the 2000-2001 era, and other times to be bullish as we have been for several years. It is not a "perma-bull" posture. We clearly state what would make us turn bearish, based upon our methods, publicly stated.
Consumers of investment advice should demand this. If a pundit cites the Baltic Dry Index, or the Presidential Election Cycle, or Yield Curve Inversion, then that pundit should be willing to change the market view when the predictive indicators also change.
With yesterday’s Fed move, the yield curve (which we have argued was a poor indicator compared to the ECRI forecasts) shifted dramatically. The curve has lost the inversion, so one would think that the recession forecasts of many pundits would change.
This is not happening. At the moment, the bearish pundits start with the conclusion and then look to the causal indicators. We feel that this lacks integrity. Switching indicators to fit one’s "book" is deceptive and self-serving.
If one is an individual investor or trader, the radar should be focused on methods. Shifting methods are a danger sign.
We should all be watching to see if those who have emphasized yield curve inversion in past arguments are now reducing their estimates of the probability of a recession. If not, why not?