How stock markets are like babies

The stock markets appeared to have priced in a "blue wave" for the past few weeks, and the spending sugar high that would follow.

What happened: The stock markets were wrong. Just like they were almost every time that Nancy Pelosi or Steven Mnuchin would sprinkle a crumb of stimulus hopes, or when some press release would imply that a vaccine or curative therapeutic could be just around the corner.

Reality check: Neither the stock markets nor their "betting markets" derivatives are any better at predicting the future than a carnival fortune teller.

• Instead, they are more like babies: Quick to react, eager to grab at shiny baubles, and lacking in object permanence.

The difference between markets and babies, though, is that lots of people (media included) give credence to their phony clairvoyance.

• To be sure, certain investors have more foresight than others. Some are just plain lucky.
• But, when it comes to broad-based market movement, it would do us all some good to stop pretending that it has special meaning: that "they" must know something that other well-informed individuals do not.

The bottom line: The best way to move forward, is to remember that markets are really looking backwards, if only for a moment.