Dealing With All The Noise

Noise is what makes our observations imperfect.

Fischer Black

There’s a lotta noise out there. 

This is universally true, independent of any discussion of crypto. 

Between social media and the internet in general, politics, and television, it is a barrage.

The universal signal to noise ratio is 99 to 1 and we are being conservative in these estimates.

Crypto takes it to another level. Add it to the mix and the cacophony intensifies.

You have novelty, complexity, and volatility.

Novelty makes crypto seem suspect. Complexity makes it hard to wrap your head around. Volatility makes it difficult to contain emotionally.

The Players

Plus, you have all these different players talking their book and fostering confusion in an air of disagreement. It’s hard to know what’s what.

First, you have the influencers who amplify according to their own best interests.

Then you have the noise traders, speculators to be polite.

Then you have the pontificators who love to hear themselves chatter.

Then you have the in crowd who is highly reactive to the slightest criticism.

Then you have the cheerleaders, who are a case study in confirmation bias.

Then you have the humorists who at least provide comic relief.

Then you have the FOMO’s. Poor folks.

Then you have the haters who pile on every negative data point.

And finally, you have news media who play tricks for clicks.

All of them are chattering in a veritable festival of noise.

So How Do We Deal?

Over the short-term, there is nothing we can do. Prices will fluctuate to paraphrase JP Morgan.

Over longer periods the path is more clear.

First, forget about the short term. That’s 100% noise. 

Second, study the technology and learn everyday. Study the trends over time. Study the data. Study these things and then study more.

There is a technology revolution occurring and it’s Ancient Greece but faster as my pal Justin says. So education is the key.

Third, go to the source. What are the people who are actually building stuff writing and saying? What are they building? 

Finally, think for yourself.

Good Luck!

Signal Links

Here are a few well-curated links for your pleasure. 

Speaking of going right to the source. Polkadot Decoded is happening May 19-20. You will hear directly from founders and builders. Check it out.

And speaking of Polkadot, here is a Beginners Guide to Polkadot that covers a lot of ground clearly from two guys who know their stuff.

Fischer Black’s Noise first appeared in the Journal of Finance in 1986. It was scandalous at the time in its frontal attack on the efficient markets myth. It is more relevant than ever today.

This is a wonderful podcast about DeFi with JC Parets and Jim Bianco, two distinguished technical analysts. You can feel their enthusiasm for the topic at hand but also their grounding in behavioral empiricism. 

This Interview with Osprey Funds Founder & CEO, Greg King, on Coindesk TV did big numbers, likely because Greg is smart and shoots straight.

Imogen Heap Captures 20 Tonnes of CO2 with Debut NFT Drop via Dezeen.