Short Term Delta

Was reading a blog by David Stockman and when I read the term he used: “short term delta”, immediately my mind flipped from the world of finance to the world of sport & fitness.

For those unfamiliar with David Stockman, he was the Director of the Office of Management and Budget under President Ronald Reagan. He resigned over the failure of the Congress to reduce spending in an effort of preventing large deficits and the US national debt from growing ever larger. Current commentary by David Stockman can be found on his website: Contra Corner.

In his most recent blog: “The 30 Year Bubble – Why America Ain’t That Rich“, Stockman writes:

The entire financial and economic narrative in today’s Bubble Finance world is virtually context- and history-free; it’s all about the short-term deltas and therefore exceedingly misleading and dangerous.

So when a big trend or condition is negative and unsustainable, you generally can’t even get a glimpse of it from the so-called “high-frequency” weekly, monthly and even quarterly data on which the financial press and its casino patrons thrive. And that’s not merely because most of the data from the government statistical mills is heavily massaged and modeled and often “adjusted” beyond recognition over 3-5 year intervals of statistical revision.

Beyond that, however, even medium term trends get largely ignored. That’s because the purpose of economic and financial data today is to facilitate daily (and hourly) trading in the casino—not inform long-term investors about underlying trends, conditions and prospects.

The investor class of yore, in fact, has largely been destroyed by the last 30-years of monetary central planning and the Wall Street deformations it has fostered—-meaning that, increasingly, headline reading algo-traders and trend-following speculators are the main consumers of the “incoming data”.

What has short term deltas, “high frequency” trading, heavily modeled and “adjusted” data got to do with sport, with health & fitness, with training for performance? Glad you asked…

The mindset in the world of finance and that in the world of sport & fitness have become indistinguishable. Chasing short term delta and modeled data in finance is the equivalent of HiiT based training and personal devices which ‘live-stream’ our own health data points.

The focus has become so short term in finance that the statistics followed to track the economy no longer arise from raw data, but from data that has been massaged and heavily adjusted to fit economic models (i.e. of what is supposed to be happening based on what Central Banks say/do, not what is actually happening in the real world). Indicators used to trade financial instruments are no longer 1st derivatives as these are too slow moving, and have been replaced with 2nd or 3rd derivatives, again built not upon real data, but modeled data.

The focus has become so short term in fitness and sport science that exercise physiologists are now suggesting that exercise just seconds in duration, repeated a handful of times (i.e. HiiT – Hi Intensity Interval Training) is all that is needed to regain health, wellness, fitness, and improve performance. Plus, provided you have a steady stream of your vitals and irrelevant information such as step counts from the latest personal health monitoring band, watch, or other sort of device… you can be certain that you are wearing as much as possible to “make” you look healthy (because looking healthy has become equivalent to being healthy).

Long term trends, overall conditions and prognosis for individuals, and prospects for the economy are largely ignored.

That during this period of HiiT obsession, the population has become more overweight, more obese, more diseased, addicted and medicated has been largely ignored.

That during this period of HiiT obsession, government budgets and individual health care related expenses continue to grow exponentially has been largely ignored.

That during this period of short term delta chasing, the a minuscule number have become wealthier while the middle class continues to erode has also been largely ignored.

Instead we are obsessed with “incoming data”… what is Trump’s latest tweet; what is the latest superfood?  What industry is the M&A department forecasting Amazon will inhale next; what diet is headlining todays talk shows… Paleo, ketogenic, raw, vegan? What is the latest from the talking heads on your favorite financial news network; what is the hottest class at your local health club?

Today all that matters is “incoming data”… the current value of our stock portfolio or the data from our GPS watches, fitness trackers, apps on our smartphones.

This will end, because it always ends, and in the same way it always ends…

An accident that no one, absolutely no one could ever foresee… like the tech bubble, like the housing bubble, and now like the credit bubble, everything was/is awesome, until it wasn’t/isn’t.

As it is in finance, so it is in health: everything is awesome, until it isn’t and we wake up in a hospital emergency department… post heart attack, post stroke, or at your doctors office to receive the lab results which will confirm what you already know… it is diabates, it is cancer, it is Alzheimers, MS, Parkinsons, or whatever disease you are prone to due to familial genetics.

At this point, we look back, disappointed in ourselves, kicking ourselves for having got ourselves into this mess, for becoming so wrapped up in the details, for refusing to stop, to take a moment to just think just once without polling everyone or asking someone what they think…

Short term delta can lead to financial profits, in the short term.

HiiT can lead to performance improvements, in the short term.

But life is never lived in the short term, we always last longer than that. Its the aftermath that we rarely pay attention to… that is until we have to, or are forced to, and all of us will face having to be held accountable for how we lived. Problem is that that point typically comes as a surprise to those stuck in short term delta, swamped with piles and piles of incoming data.