Friday, November 28, 1997
A Day at the
Races
by Steve Lane
([email protected])
We all love to go to the racetrack, don't we? Of course, Foolishness being the antithesis of gambling, we don't actually bet on any of the horses. But we do love to watch them run.
(Well, we do bet, of course. But not like the wild-eyed spectators all around us. We bet that certain horses will win, not this lap, or the next, but the hundredth, and the thousandth. A nose-length, compounded for twenty years, gives us -- well, laps and laps, anyway).
So we do go to the track, check in daily, partly to watch our horses run, and partly, well, partly to drink it all up. One of the more entertaining parts is listening to people talk about the races. There are always commentators there, ready to spit out a reason why the horses were faster today, or slower, or just about the same. And there's always a reason, make no mistake. Maybe not something you and I would understand, necessarily, but, hey, what do we know? We're not in there in the thick of it, slapping cash down at the window every day. So it stands to reason some of these daily commentators might sound a little Wise to us. But for many horse-watchers, who breakfast on hot tips and lunch on tea leaves, any news is better than no news at all.
So why do the horses, as a group, do better on some days than others? Some days there's outright good news: inflation is low, so interest rates should stay low. Other days there's outright bad news: inflation is low, so low that prices might actually fall, and drag earnings with 'em. On other days there's bad news, but less bad than we expected, which in turn is good news. Yes! Off to the races again. Still other times there's good news, but not as good as we'd expected. That's certifiably bad, and the horses break stride.
Of assessments in the latter category, my personal favorite-to-date tripped over the Reuters wires a couple of weeks or so ago, on the date of the Fed's last meeting. The Fed didn't raise rates, which was good news. So the horses should have taken off. But they didn't, which was bad news. So the horses went into the tank.
The original is better. It went something like this:
"The Dow Jones Industrial Average was off over a hundred points today on disappointment that the market failed to rally as expected on news that the Federal Reserve Board had elected not to raise interest rates at their most recent meeting."
Too deep for you? Hey, maybe you don't belong at the track after all. But it's a great show, and it's hard to tear your eyes away. A little cotton for the ears once in a while may have to do instead.
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