Buffett Moves The Market? Hardly.

I really find it hilarious to read the commentary across nearly every web site this morning that Warren Buffett's statements about the bond insurance business is what moved the markets today. I showed this chart a few weeks ago on a daily basis. If you want to understand how to interpret it, scroll down to the January 28th post.

Let's look at it on an intraday basis. I pulled this just a few minutes ago so it is current. The data is overlaid on a chart of the S&P 500. It's pretty obvious to me that the market had decided to move higher well before Warren Buffett woke up this morning. The reality is today's move higher was determined before today even started. Financial journalists all too often associate correlation with causation. In other words, today's buzz is about Warren Buffett's remarks. Warren Buffett is an investing genius. So, therefore, the markets must be moving higher because of Warren Buffett. Not!

Too many of our beliefs are influenced by unreliable stimuli. One of which are journalists. Journalists often reporting with a lack of reliable data or their own bias or the bias of someone trying to purposefully bias them.

Let me put it another way. The cartoon below is a more accurate representation of the information flow on Wall Street and between Wall Street and the media.