More Shankar–the Lemming Effect?

I am late posting but can’t resist linking TWO Shankar Vedantam articles to my last post on stock market reporting. The irony is the headline on one and the introductory paragraph to the next. The first article on December 3rd, provided detailed analysis of studies suggesting that looking up at the sky may be a good gauge on when to buy or sell stock. When it’s cloudy, stocks decline; when it’s sunny, they rise. So the recommendation is to buy cloudy and sell sunny. Now this analysis, unlike the navel gazing the financial reporters indulge in every day, has the benefit of empirical data that seems plausibly persuasive. The second article leads off a discussion of a long ago study confirming a lemming-like effect among human passersby on a New York sidewalk. As they walked by volunteers looking up at the sky (at nothing in particular), the unknowing test subjects tended to do likewise.  Moreover, the more volunteers staging the skyward gaze, the higher percentage of passersby who would copy the behavior. Vedantam uses this observation to note that blindly following the herd may be yet another explanation for investment behavior. Naturally, following a herd which knows nothing more than yourself is not a good guide for investment, as Vedantam points out. While in some cases the herd may be quite right, there are times when they are not so it behooves you to discern which is which.

Naturally, this prompts me to offer another Buddhist homily from the Writings of Nichiren Daishonin, “Miao-lo comments, ‘Wise men can perceive the cause of things, as snakes know the way of snakes.’ ” WND, page 254. In other words, or perhaps I should say many more words–those who embrace the Mystic Law or the Wonderful Dharma will acquire the wisdom to know which signs are those of unthinking herds and which are those of the discerning investor. By no means, however, am I simply suggesting that all one has to do to be a successful investor is to be a devout Buddhist. On the contrary, what I am suggesting is that one will learn a methodology a law professor I once had instilled in his students: “If you know what you don’t know, you know what you need to find out.” That means having the sense to stop and figure out what you do and don’t know.  And chanting Nam-myoho-renge-kyo will help you take that deep breath, clear your head and sniff out the truth.