Enhancing Trader Performance: The tendency to twaddle

If you have nothing to say, say nothing. – Mark Twain

Have you ever been on the receiving end of a conversation or listened to an explanation and thought, “what the heck did he just say?” Or have you read something and had to reread something several times to figure out its meaning? If you have it is usually not because of your lack of understanding but the orator’s or writer’s tendency to use reams of words to hide intellectual laziness, stupidity, ignorance, or underdeveloped ideas.

Oftentimes, if the person is not prepared to answer he or she will simply make something up instead of saying nothing at all. A good example would be Miss South Carolina’s explanation of why a fifth of Americans were unable to locate their country on a map. Or, how about the following blather from sociologist Jurgen Habermas: “There is certainly no necessity that this increasingly reflexive transmission of cultural traditions be associated with subject-centered reason and future-oriented historical consciousness to the extent that we become aware of the inter-subjective constitution of freedom, the possessive-individualist illusion of autonomy as self-ownership disintegrates.” (from his book, Between Facts and Norms). If this is normal and there are facts here, I fail to see the humor.

The above examples refer to our tendency to twaddle or to engage in trivial or foolish speech. What we would call non-sense, gibberish, or rubbish. We hear and read examples of twadding almost every day in the financial media such as “earnings missed estimates” (earnings do not miss estimates; estimates miss earnings); “we’re cautiously optimistic” (oxymoron…moron); “the S&P 500 is down [X] points as investors react to [X}” (stocks in general are never up or down for any ONE reason); and “investors are selling this market” (so stocks are going to 0 since no one is buying what they are selling?). Stupid, idiotic twaddle.

Traders are no different- “The stock went up because the MACD crossed the 30 line when the price hit the bottom bollinger band” or “the stock went down because it hit the top channel line on low volume”. Stocks do not move because of some indicator or combination thereof…period. As if some indicator can predict the future. Indicators react to price, not vice versa. Indicators, price patterns, headlines, explanations, etc are all a way for us to interpret information. We want an explanation. A twaddle, in whatever form, can provide it.

For further clarification…without the twaddle: