The Value of Market Blogs

Brett Steenbarger has a (typically) thoughtful post on the value of market blogs.  It really goes beyond that question to examine process, results, and the relationship between the two.  He highlights the value new traders can gain by learning how to think about the markets.  Take a look, and then we’ll add a few thoughts.

Link: The Value of Market Blogs.

In …

There are many activities that combine skill and luck.  A top-level bridge player can take the best line and fail while a rookie makes some anti-percentage play and wins.  It happens all of the time, adding charm to the game and broadening the appeal.  Poker shows the same attributes, and is also easier to learn and to play.

You can usually tell whether someone is good at these activities by listening to how decisions are reached, not just looking at short-term results.

A couple of years ago Bill Miller of Legg Mason, owner of the current mutual fund winning streak, hosted an investor conference in Las Vegas.  The understanding shown in his presentation is virtually absent in today’s investment world, even though it is a key to his success.

Miller quotes from leading poker theoretician David Sklansky and also from former Treasury Secretary Robert Rubin (via a Michael Mauboussin) speaking at a Harvard commencement.  Here is the key statement from Rubin:

Any individual decision can be badly thought through, and yet be successful, or exceedingly well thought through but be unsuccessful because the recognized postulate for failure in fact occurs. But over time more thoughtful decision-making will lead to better overall results, and more thoughtful decision making could be encouraged by evaluating decisions on how well they were made rather than on the outcome.

Market blogs, especially those by active traders, let us see how the sausage is made.  It is something one needs to know.