A few years have passed since I’ve blogged about investing. I used to post more about it when I worked at a firm where I put myself in charge of writing a quarterly investment newsletter of sorts; then I’d basically copy and paste what I’d already written.
One of the themes of that prior investment writing I did was how there was little, if any, correlation between how the markets perform over long periods and virtually any other specific individual thing. Investing history and statistics prove that if X happens, it does not impact the future of Y.
The best current example of this investing correlation mistake is people who want to correlate the political parties with stock market performance. The fact is, there has never been a correlation between those two things. [Note to those Republicans who still believe those things are related, you actually want a Democrat in office, because the stock market went up more during three democratic presidential terms than for any republican presidency.]
Another very broad example of this investing correlation fallacy involves technical trading, which is buying or selling based on nothing more than the grid lines on a chart. For some, these simple securities price charts signal a breakout up or down, ergo an investing opportunity. It's amazing how many otherwise smart people believe in this type of technical 'strategy' when it has nothing to do with the underlying company. It's stupid.
This all makes me think, what other things do people want to positively or negatively correlate that have no real correlation? There are so many, but here are a few that annoy me:
* Scholastic grades and intelligence.
* Hours spent at the office and work.
* Owning a Fitbit (or other electronic health tracking device) and weight loss.
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