Adjustments Matter

Adjustments Have Limits
Inflation Basket
Not Just Numbers
If It’s Not One Project, It’s Another

Federal Reserve officials like to call their decisions “data dependent.” Business leaders say it a little differently, often “data driven.” The point, in both cases, is something like: “We consider relevant data when making important decisions.”

All well and good but does anyone really say otherwise? “I prefer seat-of-the-pants guesswork” doesn’t typically impress investors. So of course, people claim to be data-driven, even when they aren’t.

Worse, you can sincerely think you are data-driven while looking at data that’s incomplete, distorted, or just plain wrong. We live in a complex world. The kind of measurements that lead to good decisions aren’t easy even when everyone involved means well. Add in the fact that we’re all biased in different ways, and it all gets very complicated, very fast.

Today I want to follow up on last week’s Assumptions Have Consequences letter, in which we discussed the way economic projections assume things about the future. As I said, these assumptions are necessary but we should understand what they are and why we’re making them.

Similarly, we need to understand the adjustments often made to raw data before we see it. These, too, can be helpful. But you need to understand them if you rely on adjusted data to make important decisions… as you probably do.

First, let me alert you to a new video we will post shortly: Keith Fitz-Gerald’s interview with Ed D’Agostino. We received hundreds of reader questions, and Keith answered as many as he could in the time available. Here’s a brief rundown of the topics and names Keith covered.

  • Keith described his investing framework in detail, including the tools he uses to weigh one opportunity vs. another.

  • He also covered the reason why, among 600,000+ tradable securities worldwide, only 50 truly matter for most portfolios.

  • Keith gave his thoughts on Apple, Tesla, Microsoft, Peloton, Goldman Sachs, defense tech names… cybersecurity… AI… and more.

  • He discussed position sizing, allocation, his thoughts on modern portfolio diversification, as well as how to improve your “mental game” when making portfolio decisions.

Keith’s passionate about markets—witty, to the point, and able to see through the fog of chatter and headlines. It was a wide-ranging conversation, and I’m sure you’ll enjoy watching it.