Information is Power.
Consequently, your choice of information source heavily contributes to your perceptions, ideas, and worldview.
Coincidently, news sources are a lightning rod for vitriol and polemic.
I am still somewhat surprised by the abject hatred I hear expressed towards a particular news source by those who hold an opposing bias. This often leads to claims of fake news, delusion, and partisan press. Likewise, it is common to hear derision toward anyone who consumes that news source.
Perhaps the reality is that most sources are flawed – and the goal should simply be to find information that sucks less?
It's to the point where if you watch the news, you're misinformed, and if you don't watch the news, you're uninformed. News sources aren't just reporting the news ... they're creating opinions and arguments that become the news. Moreover, many consumers don't care enough to think for themselves or to distinguish facts from opinions.
Here's a chart that shows where news sources rank on various scales. It has default options and over 1400 sources you can add to the interactive version. You can click the image to go to an interactive version with more details. It gets updated every year, and Version 9.0 just got released.
via Ad Fontes Media
I once spent fifteen minutes arguing about how you know whether the information in this chart is accurate. If you're curious about their methods, click here.
The "new normal" is to distrust news agencies, big companies, the government, and basically anyone with a particularly large reach.
Perhaps even more dangerous is the amount of fake news and haphazard research shared on social media. Willful misrepresentations of complex issues are now a "too common" communication tactic now on both sides ... and the fair and unbiased consideration of issues suffers.
Social media spreads like wildfire, and by the time it has been debunked (or proven to be an oversimplification), the damage is done. Once people are "convinced," it is hard to get beyond that.
In reality, things aren't as bleak as they seem. People agree on a lot more than they say they do. It is often easier to focus on "us" versus "them" rather than what we agree upon jointly. This is true on a global scale. We agree a lot. Most Democrats aren't socialists, and most Republicans aren't fascists ... and the fact that our conversation has drifted there is intellectually lazy.
This idea that either side is trying to destroy the country is clearly untrue (OK, mostly untrue). There are loonies on the fringes of any group, but the average Democrat is not that unlike the average Republican. You don't have to agree with their opinions, but you should be able to trust that they want our country to succeed.
I don't know that we have a solution. But there is one common "fake news" fallacy I want to explain at least a little.
It's called the Motte and Bailey fallacy. It's named after a style of medieval castle prioritizing military defense.
Launceston Castle via Chris Shaw, CC BY-SA 2.0
On the left is a Motte, an artificial mound often topped with a stone structure, and on the right is a Bailey, the enclosed courtyard. The Motte serves to protect not only itself but also the Bailey.
As a form of argument, an arguer conflates two positions that share similarities. One of the positions is easy to defend (the Motte), and the other is controversial (the Bailey). The arguer advances the controversial position, but when challenged, insists they're only advancing the moderate position. Upon retreating, the arguer can claim that the Bailey hasn't been refuted, or that the critic is unreasonable by equating an attack on the Bailey with an attack on the Motte.
It's a common method used by newscasters, politicians, and social media posters alike. And it's easy to get caught in it if you don't do your research.
Conclusion
As a society, we're fairly vulnerable to groupthink, advertisements, and confirmation bias.
We believe what we want to believe ... so it is hard to change a belief (even in the face of contrary evidence).
But, hopefully, in learning about these fallacies, and being aware, we do better.
I will caution that blind distrust is dangerous – because it feels like critical thought without forcing you to think critically.
Distrust is good ... but too much of a good thing is a bad thing.
Not everything is a conspiracy theory or a false flag.
Do research, give more credence to experts in a field - but don't blindly trust them either. How well do you think you're really thinking for yourself?
It's a complicated world, and it's only getting more complicated. But, hopefully, it encourages you to get outside your bubble and learn more about those with whom you disagree.
How Markets Performed in 2021
2020 was a roller coaster of volatility, and while 2021 was as well, most asset classes saw improvements as the world reopened.
But it wasn't all smooth sailing. There were significant supply chain struggles and rising inflation ... not to mention the rising cases of COVID.
Regardless, markets are not the economy, and while there are numerous factors to think about, I've always found markets interesting.
2021 was a year of rampant speculation, in part because so many systematic traders underperformed. For example, Renaissance reportedly saw ~15 billion in outflows last year (despite double-digit returns) as their clients likely moved towards more "exciting" opportunities.
Of course, some of those "exciting" opportunities were cryptocurrency-related. Moreover, chasing performance like that is often mean-reverting. Yet, I've seen a massive increase in interest among various business groups in crypto, Web 3.0, and the Blockchain.
Cryptocurrencies
While crypto generally performed well in 2021, 2022 has seen a drop that erased over $1 trillion in value.
The reality is that crypto markets matured a lot in 2021. The thousands of coins are mostly a distraction, but there are many interesting coins from various sectors with interesting technology behind them. There is increased infrastructure and decreased correlation between coins. Unfortunately, not enough to keep this drop from affecting the whole space.
So the question is, is this a "discount" for people to buy into the space, or a sign of future troubles?
It's no secret that I've always been a fan of Blockchain but cautious of cryptocurrencies.
I think there is a lot of money to be made speculating in cryptocurrencies, but how much of that money being made is attributed to luck vs. skill?
Crypto's are interesting, in part, because they're a digital currency decentralized over a peer-to-peer network.
The more people are willing to accept it as a medium of exchange, the more valuable it becomes (and the more it becomes a stable store of value).
Supposedly, decentralization provides it safety from censorship and government interference - meaning it has value as an international currency and as a currency for black-market transactions. But, in my opinion, that remains to be seen (and I consider it unlikely for most cryptocurrencies).
However, the worth of a Bitcoin isn't just based on sentiment (on one hand, there are desires to avoid fiat currency vagaries, government interventions, and scrutiny, while having a fair price discovery method, etc. ... on the other hand, there are also the costs to mine a Bitcoin, transaction fees, etc. and crypto has recently been under fire for its huge environmental impact).
Compared to a reserve currency – whose worth is primarily influenced by trade value and other macroeconomic factors - watching crypto's volatility can be scary.
That being said, as adoption increases and more businesses enable it, it's possible that it will continue to legitimize. For the time being, I remain a long-term skeptic because there is too much working against it.
Many of my initial complaints are centered on coins as currency. I get that there are already many interesting uses of Blockchain that will also help to bring credibility to coins as a store of value.
The question for me is, even if cryptocurrency is here to stay long-term (and avoids government control), which coins will it be? Do they even exist today?
I'm positive there is money to be made related to the Blockchain, NFTs, and cryptocurrencies. But, at this point, it's a speculators game, and I think the best way to capitalize on this trend sustainably is to sell picks and shovels for the gold rush, instead of trying to stumble upon gold.
Posted at 10:50 PM in Business, Current Affairs, Ideas, Market Commentary, Science, Trading, Trading Tools | Permalink | Comments (0)
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