Skepticism of The Economy Tracker

This is the fourth installment in The Rhythm of the $ystem series. To start reading from the beginning, click here:

If you are skeptical of The Economy Tracker, I can’t blame you. I would probably be one of the first to scream “BULLSHIT!!!” at the top of my lungs if I were on the other side of the screen. Having experienced firsthand the plethora of bad information available regarding markets and the economy, the last thing I want to do is add to that and waste your time. Therefore, I feel it is only right to address some skepticisms you should have about The Economy Tracker.

It’s Not Perfect and There’s Room for Improvement

First off, it’s important to point out that The Economy Tracker is not perfect. But then again, you show me something perfect and I will show you a lie. The beauty of that is anything can be improved upon. And that is the plan. To constantly be looking for and testing ways to make The Economy Tracker even more timely and beneficial.

With that being said, I do believe that it is better than anything else available to help the public understand and navigate the economy. I believe this because I have been searching for it for two decades. While I never found the roadmap I was looking for, I did find hundreds of clues along the way. By piecing them all together, a visible and trackable pattern emerged.

It then took several months to write it all out, categorize it, and then quantify it to eliminate the ambiguity. The quantifying of the data is where the indicator can be improved the most, which will make it even more timely. That is and will always be one of the main points of focus.

The Indicator Itself Looks Amateur

Here’s an obvious one; the appearance looks like an amateur put it together. There is a very good reason for this, I am terrible at graphic design. However, the information the tracker provides is the point, not the aesthetics.

The look will be improved eventually.

It's Impossible for the Typical Person to Follow and Understand the Economy

There is a commonly held belief that it is impossible for the typical person to track and understand the monstrosity that is the US economy. While mostly true throughout history, I believe that this is no longer the case in today’s world as enough information is publicly available for the first time. The key is to know what to look for, when to look for it, and most importantly the correct trend(s) to look for at different times.

What was once impossible is now attainable due to technological breakthroughs of the past 20-30 years. This is especially true in the world of analytics.

We are still in the infancy of having the world available at our fingertips.

The Tracker Alone Does Not Provide the Answer to What To Do and When To Do It

This is true and will always be true. While school taught us the simplicity of there being only one correct answer to a question, the truth is that there will always be many variables in play to make decisions of consequence. The Economy Tracker is not designed to give you all the correct answers, but instead to provide a framework in which to make better informed decisions regarding your financial life and free you of unwarranted anxiety.

Publicly Available Data is Incomplete and Constantly Updated After it’s Been Reported

This is especially true when it comes to government data. It is “updated” regularly weeks after the initial print. Everyone and everything that tracks the economy has to deal with this reality. Therefore, we’re all using the same data. The key is to constantly watch and track all of the data on a regular basis.

By consistently tracking dozens of data points, The Economy Tracker gives a broad perspective. Therefore, while the later updated data points can slightly skew the short-term signal for a moment, the long-term remains overall consistent which is the main point of the tracker.

Market Indicators Are Backward Looking

The truth about market indicators is that they tell us what has already happened. However, that becomes less relevant the longer the term an indicator tracks. What really matters is knowing the trends and when the trends change.

The data tells a story. It is the job of a market follower and/or participant to listen to the story the data is telling you.

While it is impossible for economic indicators to give real time information, the best ones serve as a piece of the puzzle. In this case, to display the picture of the puzzle being assembled.

The Journey Through a Credit Cycle is Not Linear

Economic data and the flow of money do not move in a linear progression. Instead it can move three steps forward and 1 step back. Much like a driver maintaining a specific speed will repeatedly go a little faster, back off and slow down, and then speed back up again.

The economic data can reflect that as well, so while there may be times that it looks like the end of one phase is close, over time we may find that the data later reveals the economy is no longer as far along in a phase as was thought to be the case several months ago.

You want to be less concerned about how the data progresses in each phase, and instead pay closer attention to when there is confirmation that the phases have changed.

Perfectly Imperfect

While The Economy Tracker is data driven, it is not perfect because markets and the economy are not scientific as they are mostly driven by human behavior. Nothing is perfect once human behavior is involved. So understanding the markets and economy is more of an art than a science. While it offers more than enough to paint the clearest picture of the current state of the economy, there’s room for improvement. But the truth is, there will always be room for improvement because markets change over time due to the fact that humans change over time. But as humans change, we also remain the same as we were hundreds of years ago at our core. That is why understanding markets will never be solely data dependent.

In the coming days you will see a post regarding where the current credit cycle is and what that means for the the economy in the coming months. After which you can follow along on the journey in The Rhythm of the $ystem as the data reveals itself. By doing so, will learn to follow the clues and what to keep an eye on as the phases come and go.

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