“I am very cautious about going against the herd; I am liable to be trampled on.” —George Soros
Has the stock market’s behavior been a resounding clarion call to anyone open to listening? Real investors, the intrepid souls with skin-in-the-game who are willing to take the risk, have been justly rewarded.
Chicken Little is a story about an anxious bird that gets hit from a falling object overhead and acclaims to no end, “The sky is falling; the sky is falling.” Chicken Little’s panic-driven message created widespread fear before the facts were ever counted. It is a narrative that sensationalists hold tight. Even some of the most respected minds are bellowing a perilous situation for Americans and the world order. They contend that financial markets are hanging by a mere Fed thread. Collectively, their words become the headlines.
- “Worst Recession Since the Great Depression.” IMF
- “World faces the worst recession in 100 years.” Economists
- “Expect worst recession in 150 years,” says former IMF chief
- “Worst recession in 300 years.” Magzter
Michael Mauboussin reminds thinkers of the inherent wisdom of crowds by way of diversity prediction theorem, teaching that when there is a vast diversity of individuals in a group, the error of the crowd is limited. In other words, the self-anointed intellectual elite, who are published and venerated by the establishment, are likely to have the rug pulled out from under them if their message goes against the wisdom of the masses.
June’s employment rebound does just that. 4.8 million hires were put back to work last month, and the employment rate jumped by 2.3%. Is this further confirmation that the crowd/stock market has been the right path to follow so far? Americans love life and pride themselves on making a difference and working hard. The best is yet to come.