Market Noise

Noise is unwanted sound. For investors it is those pieces of data, stories, or even price moves, which may seem like information but actually tell us nothing about the future returns of an asset. Trading on noise can be hazardous to your wealth.

In Market Noise we hope to identify examples of noise which may be prevalent in an era of exponentially growing data and obsession with the short term. Why? To try not to fall victim to noise in our own decision making. Because human beings love stories noise can be highly seductive. We must always be on our guard and looking for examples of noise is just one step towards doing this.

There is no volatility paradox

From the Financial Times this month:

“The tranquillity of Wall Street’s ‘Fear Gauge’ continues to baffle investors, given the market uncertainty”

Financial commentators and journalists – who are just as prone to herding as investors themselves – have brought attention to the ‘volatility paradox,’ the apparent disconnect… Read the article