Results matter.  Investors (and traders) seeking information need to know what to read.  Time is limited, so everyone depends upon those who provide “linkfests.”  Here, we highlight only the link sources that we regard as the best on the Web.

Keeping Score

Getting the links to many sources is extremely valuable, and we salute those who read everything and point out key stories that we all want to read.  Having said this, the daily links often do not tell the whole story.  For this we must look to those who examine the long-term records.

Market Predictions.  CXO Advisory (now added to our featured links) uses first-rate methods to analyze many questions of interest to investors and traders alike.  Often acting in response to questions and then studying the public record, CXO evaluates market predictions and provides a confidence indicator as well.  In recent days CXO has evaluated the “unimpressive” forecasts of Bill Gross and the “very poor track record” of Jeremy Grantham.  For a complete list of evaluations, readers can check out the Guru Grades section of the site.

Joining in the reality check is Eddy Elfenbein, often a source of information and research on specific market questions, as well as solid advice.  Eddy points out the error in media coverage of Robert Shiller, whose book serendipitously hit the markets at just the right moment.

Shiller is a perma-bear and investors who followed his advice lost out in a big way. In the last five years, the S&P 500 has doubled. Shiller missed that and every other rally. He was a bear long before the market nose-dived and he’s continued to be a bear ever since.

Economic Forecasts. Bill Rempel has a well-deserved reputation for  hard-hitting analysis that is both accurate and fair.  His work has achieved great readership even without any acknowledgment from the big-time bears.  It is on our daily reading list and should also be on yours.  His recent series of posts took a careful and well-researched look at the economic predictions from Barry Ritholtz, Mish, and Nouriel Roubini.

All of the people reviewed write leading blogs and get massive media exposure.  They are all extremely intelligent and articulate.  They write persuasively and well.  Those reading their work find it persuasive.  Reviewing their overall record is hard work.  It would be a service to the investment community if  the gatekeepers of the investment blogging world –blog aggregators, journalists, and the linkfest professionals– give the attention due to those doing comprehensive reviews.

The Sources of Error

The spectre of confirmation bias confronts everyone studying the economy and the stock market.  It is so easy to make two important errors:

• Citing data selectively, and
• Interpreting data with a spin — perhaps unintentionally.

Since all evidence is imperfect, this happens readily.  Picking two sources of commentary on Friday’s jobs report (it could have been any of the listed guru’s)  Accrued Interest writes a thoughtful commentary suggesting that there is “lawyering” going on.

Meanwhile, there was sure a lot of lawyering going on across the blogosphere. One of the reoccurring themes here on AI is that too many investors act like lawyers, arguing their case from a predetermined point of view, and seeking out facts that support that point of view. Good investors act more like detectives, starting with an open mind and letting the evidence lead them to a conclusion.

Nouriel Roubini and Barry Ritholtz’s posts on yesterday’s NFP release both smack of lawyering. Both harped on the large increase in teaching/education jobs, which is a legitimate albeit limited point. If changes in the school calendar made measuring teaching jobs difficult, then indeed July and August reports were understated. So the bad news we thought we were getting in those months really wasn’t as bad as we thought. I note that neither blogger wrote one word about the education job issue after either the July or August report. (Here’s Roubini and here’s Ritholtz here and here.)

In both cases, I can’t help but feel as though the writer is looking for bearish news to report. When August jobs was reported as negative, both sounded the alarm that a hard landing was coming. But when August was revised higher because of a legitimate discrepancy in the data both bloggers dismissed the revision as a mere data discrepancy. You can’t have it both ways. The truth is that the job situation is better than we had thought.  

Friday’s non-farm payroll report (NFP) is indeed a great example.  Those with a bearish economic view have engaged in a multi-year trashing of the Bureau of Labor Statistics.  The arguments range from conspiracy theories to accusations of poor methodology.  The rhetoric is loaded with phrases like “phantom jobs” with emphasis on the BLS implementation of a means of recognizing new workplaces, the birth/death adjustment.

The simple fact is that the birth/death adjustment dramatically improved the jobs forecast for the last period measured, as it has for all prior periods since it was implemented.  Nearly 80% of the jobs projected through this adjustment proved to be real, but the bearish pundits focused on the 20% error.  As regular readers know, the NFP report is a major interest of research at “A Dash” .  We plan a more comprehensive review of the multi-year performance of BLS job measurement.

Meanwhile, readers might wonder when these pundits will start with the data rather than their conclusions.

Last 5 posts by Jeffrey Miller

• Obama’s “War on Business” - February 8th, 2010
• Weighing the Week Ahead: Psychology versus Data - February 1st, 2010
• Reacting to News: What to Make of Dubai? - November 28th, 2009
• A Tough Nut to Crack - October 29th, 2009
• ETF Update: Looking to the Internet - October 25th, 2009