On Mea Culpas, Admitting to Being Wrong, Objectivity, and Changing Stances in the Face of New Evidence

Being a blogger is not a particularly easy job. You put out your analysis and your thoughts and it is subject to endless critiques and criticism. And often you get attacked on both ends of the spectrum, and sometimes in the very same post! I have been accused of being too bullish and too bearish in the same post. I have been accused of not being objective in interpreting macro conditions from very different viewpoints.

And you know what, it's par for the course.

As I have said many times before: I have nothing to sell. I am not trying to convince anybody of anything. I have an analytical mind and I lay out my analysis for anybody to consider. My only goal is to point out things that may not be obvious and to further reasonable discussion and observations regarding macroeconomics and the markets. Maybe you agree with me. Maybe you think I am full of crap. Maybe you don't care either way. I am fine with any of these reactions. As long as one of my posts caused you to think, or to perhaps look at something in a slightly different way, then it did its job.

So my only 'job' in this 'business' (if you can consider putting in a tremendous amount of time and effort into an endeavor without getting paid, nor any intention of getting paid, and rarely even acknowledgement a business) is to stay objective. To be honest in my assessments. To acknowledge when my old assessments were incorrect, to reassess and provide new thoughts. Even when (and maybe especially when) these new thoughts and conclusions are unpopular.

And even this point has been a point of contention on my blog. I have been accused of being biased and providing non-objective analysis many times, including recently. And usually I let it roll off.

But you know what, it is time to set the record straight.

I have acknowledged being wrong and acknowledged that a stance needed to be changed many times. But those that criticize me are too lazy to search through my work, so I will do the work for them.

Hopefully this will end this criticism and will definitively set the record straight (but I doubt it, and won't be holding my breath. But at least I can link back to this post).

On being objective and admitting to being wrong - Feb 2011

http://marketthoughtsandanalysis.blogspot.com/2011/02/lessons-to-be-learned-again.html

...The problem is that the market never gets there all at once. Even within secular cycles, there are oscillations (cyclical bull and bear markets). And anyone who gets too ideological on the secular trend will get blindsided when a cyclical countertrend emerges.

And I am 100% speaking of myself. I fully admit I have allowed my bearish bias from playing this cyclical bull market correctly. There was a significant amount of honest-to-goodness bullish macro and fundamental developments (the stuff that any bull market is built on top of) that I was discounting because I believed it was in the 'noise' compared to the bearish macro.

I was wrong. I am not afraid to admit that. As an analyst I have to understand my mistakes and why they happened. ...

On providing bad analysis, recognizing that it was bad, and giving kudos to where it is due - Jan 2011

http://marketthoughtsandanalysis.blogspot.com/2011/01/macro-thoughts-and-observations-is-bear.html

...There were quite a few headwinds and crises that the market absorbed and digested, and ultimately shrugged off. Nearly all the markets have bettered their April 2010 highs. To the bulls that foresaw this, I have one word:

'Bravo'

Seriously. There is absolutely no sarcasm intended.

There were many positive developments occurring (corporate balance sheets were getting cleaned up, corporate higher interest debt was being swapped for lower interest debt, earnings were increasing) and for those that thought that the positives in the market would outweigh the negatives, you made the right call. ...

On changing stances in the face of new evidence - May 2011

http://marketthoughtsandanalysis.blogspot.com/2011/05/inflation-and-asset-price-responses-and.html

...I will never take any argument that someone makes completely on faith or at face value. By the same token I will not dismiss any analysis out of hand without considering its merits. This also means that as I incorporate new ideas into my own thinking process, I will let go of previous misconceptions if I believe that they are in error. And I do think some of my previous macroeconomic analysis has been in error. As always, I fully reserve the right to be wrong, and to change my stance upon the discovery of better (more accurate) information and ideas. ...

On acknowledging that my old analysis was ideological and biased and striving to stay objective now and in the future - Jan 2012

This one is a very big deal. I have been hugely biased and ideological in the past. In fact all the analysis on this site and in my Caps blog from 2009 to the end of 2010 could easily be thrown away because of its heavy ideological bias. The reason I don't throw it away is to serve as a reminder that I make mistakes (and sometimes *huge* ones) and fall victim to thinking in terms of a bias. It is to remind me to stay vigilant and objective.

http://marketthoughtsandanalysis.blogspot.com/2012/01/update-on-long-term-projection.html#comment-400123205

...Here is where I am coming from with this, why I use the term ideological in a very specific sense and yes, in a slightly derogatory sense.

I used to have a hugely ideological bent to both my macro analysis and my TA. If you read this post, you will see it all over the place: http://caps.fool.com/Blogs/sti... . In retrospect it was pure garbage. Not because it was wrong (which it was) but because I *knew* the US economy was in the toilet, because I *knew* that earnings were 'fake', because I *knew* that another crash was coming, because I *knew* that the Fed was engaging in 'debt monetization', etc.

The reason why it was ideological garbage is because I had a set of preconceived notions about the macro situation, all of which were completely unfounded, and came up with a count to justify that stance.

I didn't admit to myself at the time that was what I was doing, but in retrospect it was so obvious. I am now better able to determine when I make unfounded arguments. And I can easily see when others fall into the same trap.

Macro is not a subject to be taken lightly. And understanding the mechanics of how the banking and financial system works is key to understanding the real causes and effects in a monetary economy. It allows to you understand the bond market. It allows you to understand different monetary systems (e.g. Dollar vs. Euro).

EW is also not a subject to be taken lightly. If you want to know what you are doing, one really needs to do a *lot* of EW analysis and looking at historical waveforms (not just idealized textbook waveforms).

And I see many who continue to do what I did in 2009, come up with some opinion of what is going on in the macro environment (without any real understanding as to the mechanics involved = ideological as opposed to rational: e.g. using convertible currency economic analysis on a fiat currency system) and come up with a count to justify it (i.e. the P3 count to justify a 'debt deflation' / 'US Government bond market implosion' position). It makes no sense and frankly it makes me angry.

I fully acknowledge that I might be wrong, that my projections are even remotely right. But I use historical, macro and statistical analysis to determine what is 'likely', and talk in terms of odds on preferred counts. I know I have biases, but I am being as honestly objective as I can be. If I don't understand an aspect of macro, I will admit it to myself and research it. I will also to the due diligence and look at historical precedents for waves, etc. I feel like my work now comes from a place of analysis, not from a place of ideology. ...