Investment wisdom a la George Carlin

George Carlin was one of my favorite comedians growing up, and he remains so today even after his death three years ago (I can't believe it's been that long). In large part this was because my sportswriter father consulted Carlin on some of his sports-related comedy bits--and as a result our house was flooded with Carlin stand-up cassette tapes (yeah, it was before CDs and MP3s, I'm old, get over it)--but it was also because his dry, sarcastic wit resonated with me, and rubbed off significantly on my own developing sense of humor.

I was amused, then, to see a post at The Big Picture blog today with the theme of investment advice from George Carlin. A sampling:

Don’t confuse causation with correlation.

“Death is caused by swallowing small amounts of saliva over a long period of time.” ~ George Carlin

If you look hard enough for patterns and correlations, for better or worse, you’ll find them.  However a correlation should not be confused with causation. The winner of the Super Bowl, for example, does not cause a movement in stock prices.

Don’t try to outsmart the investor herd.

“Think of how stupid the average person is, and realize half of them are stupider than that.” ~ George Carlin

This wisdom extends upon the immediately preceding point.  While Mr. Carlin would advise not to confuse causation with correlation, his angle is that many people do confuse them.  There are just enough idiots that believe a Super Bowl win from the old American Football League is positive for the stock market and, as a result, they will buy stocks, hence causing a movement in stock prices.  No matter how much fundamental analysis you do, the psychology (and irrationality) of the herd can make all of your diligent and intellectual analysis useless in an instant.

Try not to live in a hypothetical world.

“What if there were no hypothetical questions?” ~ George Carlin

Most headlines in financial media are posed in the form of a question that no prudent person will spend significant time trying to answer.  Is the Bull Market Over?  Is This a Correction or the Beginning of a New Bear Market?  Should You Buy Gold Now?   Just remember that these questions are designed to get you to read the underlying article and that the media does not exist to provide useful information; it exists to sell advertising.  To accomplish this end, media sources must successfully distract you long enough to read their attractive hypotheticals.

Good stuff. I miss George Carlin, because he had a true gift in terms of being wickedly funny while also being uniquely insightful. It takes a smart man to be a consistently good comedian, and Carlin was certainly that. To consult his comedy for helpful words of wisdom is therefore not necessarily the worst idea in the world.

[The Big Picture]