Mark Twain states in his autobiography there are three types of lies.
“Lies, damned lies, and statistics.”
It’s a funny little quote, often parroted by pundits and talking heads to belittle or protest statistics they don’t agree with.
But Mark Twain didn’t wholly object to statistics, as some folks would have you believe. In fact, he was a voracious consumer of stats and would often reference them in his speeches to prove his point.
What Twain was getting at here is: while statistics will always claim to be an expression of the facts, they are often biased by the manner in which they are collected… and especially by who they are collected by.
For example, a few years ago, the Wall Street Journal reported that 70% of small business owners think social media is important. Meanwhile,a survey conducted by Citibank said that only 24% of small business owners find social media useful for their business.
How could there be such a huge gap in these numbers?
Well, let’s look at how they were collected.
Citibank performed a phone survey, cold calling small businesses owners. Pretty standard practice, if not overly scientific.
Meanwhile, the WSJ conducted their survey on Facebook and Twitter.
Let me repeat that.
They actually conducted their social media survey on Facebook and Twitter.
It doesn’t take a genius to realize that folks who are active on social media might be more inclined to think social media is important, right?
But either the folks at the WSJ never considered that. Or they weren’t overly interested in the truth. Heck, they probably just wanted a quick and easy statistic to plug into an article about small business and social media.
This example is a couple of years old by now, but it’s more relevant than ever.
I’m sure you’ve heard of the “blue wave”?
In today’s issue of Money & Crisis, financial expert Jim Rickards sorts through the lies, damn lies, and statistics of next week’s midterm elections.
All the best,
Editor, Money & Crisis
P.S. Jim was one of the few folks who predicted Trump’s win, Brexit AND the 2008 financial crisis. To find out how he does it, grab a free copy of his new book The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis. In it, Jim reveals the powerful strategies you can use to protect your money and your family from the next crisis. Claim your FREE copy now.
A “Blue Wave” in Midterm Elections? Not So Fast
By Jim Rickards
My specialty is global macroeconomic analysis. I don’t usually get too involved in politics, and frankly,I’d prefer to avoid the subject altogether.
But at certain times, politics intrudes on markets and you have to account for it. With the midterm elections coming up next week, it’s certainly an important time right now.
The elections will decide control of the U.S. House of Representatives and U.S. Senate. And the outcome of those contests will determine whether Trump is allowed to finish his term or not (see below for more on that, and which outcome is most likely).
Let’s dive in…
Whatever you think of Trump personally, we all know how the mainstream media treat Donald Trump. The coverage from The Washington Post, The New York Times, NBC and other outlets is relentlessly and exclusively negative.
Trump gets no credit for reducing unemployment, cutting taxes, boosting growth, achieving a breakthrough with North Korea and standing up to the dictators in Syria and Venezuela.
Meanwhile, the mainstream pundits are predicting a “blue wave” that will put the Democrats in control of the House of Representatives and lead directly to impeachment proceedings early in 2019.
Debunking the “Blue Wave”… and a Crisis Strategy for Your Money
The blue wave has been the mainstream narrative for months.
Basically, the idea is that Democratic voters are more motivated than Republican voters because their hatred of Trump is more powerful than support for Trump among Republican voters.
The Kavanaugh confirmation process only inflamed Democratic passions even further and should help the turnout.
Perhaps. But ordinary Americans may have a surprise in store for the pundits, as they did when Donald Trump was elected in 2016. The blue wave is by no means a foregone conclusion.
The ability of everyday Americans to see through the media spin will have a huge impact on the midterm elections coming up in two weeks.
Even a coordinated anti-Trump assault from the media and the Washington establishment can’t hide the good news forever.
Whether it’s sustainable or not is another question, but everyday Americans have seen that their paychecks are getting bigger, their companies are doing better and their investments are on the rise.
Please understand, I’m not taking sides here. And you’re free to vote for whichever candidates you think are better for the country. I’m simply trying to predict the outcome with a scientific approach using statistical science, predictive analytics, applied mathematics and behavioral psychology.
These disciplines are what led me to call Trump’s election in 2016 when virtually the entire media establishment was predicting a Hillary landslide. They’re also what led me to predict Brexit, also in 2016. The bottom line is they are highly effective tools.
But here’s what you need to understand as an investor:
The turmoil surrounding potential efforts to unseat Trump could roil markets to a greater extent than any event since Brexit and the election of Donald Trump as president.
That means you should be prepared for market volatility in the coming days and weeks. What can you do to protect your money?
I like certain assets over others, but with a lot of volatility in the air, being overly committed to any one asset is never a good strategy. If you’re overweight stocks or you’re overweight bonds, it can be difficult to pivot away into some other asset class without taking losses.
In the face of rising volatility, cash is the ideal way to protect your portfolio. An increased allocation to cash gives you options. You can use that cash to pivot to other assets when things settle down.
You may not gain much with cash, but more importantly, you won’t lose anything.
Editor’s note: For more of Jim’s insights into developing financial crises, check out his new book The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis. Right now, it’s free to readers of Money & Crisis. Click here to get a hardback copy delivered straight to your home.