Hillary, New Hampshire and The Spit
Trading is all about psychology, and the same psychology that makes winners and losers in the stock market is often the same psychology that makes fools of us in other contexts.
Especially politics. In the three days after Barack Obama’s surprise win in the Iowa Caucuses, pundits had declared the Hillary Clinton campaign all but dead-on-arrival in New Hampshire. Newspapers proclaimed that the “Clinton Era” was officially over. The Boston Herald tabloid opined that Hillary was “so yesterday.” Staff shakeups were predicted. The Clinton campaign was allegedly running out of money, with supporters looking to bolt. In the space of just three days, political commentators spoke of an “Obama Bullet” aimed right between the eyes of the Clinton campaign, an “Obama Freight Train”
that was barreling down the tracks and likely to run over any politician foolish enough to stand in its path.
At least until it didn’t.
Hillary Clinton’s New Hampshire win was close, but as they say on the sports pages, a “W” is a “W” and the Clinton campaign now has a notch in the win column. And, predictably, almost as quickly as the press was to claim that Obama was unstoppable after Iowa, Senator Clinton was heralded as achieving what NBC pundit Tim Russert called “the greatest comeback in political history.” Now Hillary was the bullet, the freight train powering down the rails.
The modern media, in politics as well as in finance, is in the storyline business. At extremes, when markets are plunging or the fortunes of political candidates rising and crashing like waves in a stormy sea, this story-making can reach a feverish pitch. Events are happening and it is the self-appointed task of the modern media to explain them
— even if the explanations are obvious, inconsistent or, on further examination, completely opposite of what is really going on.
This story-making is part of what Larry Connors, CEO of TradingMarkets.com, has referred to as “the spit,” the often inane, always emotional, running commentary that more often refers to what has happened than what will happen.
As the evening wore on the media, interestingly, and with typical narcissism, began reflecting on its own behavior in recent days. Did it overhype Obama? Was it too harsh on Hillary? Did the media
— like a hobbit with a Ring of Power — use its massive powers of influence for good or ill? Never mind, as Washington Post columnist Eugene Robinson pointed out, that the so-called “late deciders”
— people who decided who to support in the New Hampshire primary in the three days after the Iowa caucuses
— did not break significantly for Hillary Clinton. Never mind, as Air America host Rachel Maddow noted, that Hillary had been polling consistently as the front-runner in New Hampshire and had only seen her numbers drop slightly in the wake of Obama’s victory in Iowa. Never mind all of that. There was a story to be told
— whether that story was a reprise of the Clinton political comeback from the 1992 New Hampshire primary campaign of Hillary’s husband Bill, or the tired talk of New Englanders in general and New Hampshire voters in specific as “rebels” who wouldn’t take their political cues from a bunch of farmers in Iowa (as if the other 48 states would slavishly follow Iowa’s lead). And the media was intent on telling it.
As many market observers have pointed out, just because the masses are often wrong is no reason to blindly bet against the consensus.
Being a perma-contrarian is no better than being a perma-bull or a perma-bear — and it is no more likely to make you money as a trader or investor. But when the decibel level of the crowd becomes almost crushing, when broad agreement moves to ringing unanimity and then on to complacency and a sense of inevitability, that is when the consensus can be most dangerous and when the opportunity to buck consensus can, potentially, be at its most rewarding.
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