Doomsayers May Not Be The Best For Investment Guidance

Barry Ritholtz:

The recency effect also helps explain the rise of the cranks, who have enjoyed undeserved credibility in the aftermath of the recession. These are the people who, after a tremendous collapse, only see doom and gloom.
They include:
l  Crisis rock stars: The collapse made their reputations, and they are reluctant to go back to a more normal footing.
l  Hyper-inflationistas, who are convinced we are returning to the days of the Weimar Republic.
l  Gold bugs: The yellow metal may have underperformed equities for four decades, but it is their excuse for missing a 100 percent market gain over two years.
l  Conspiracy theorists: From Birthers to Truthers to all manner of blithering idiots, these folks would be totally ignored during normal times.
l  Austerians: The people who believe the only way forward is through painful spending cuts.
l Thinly veiled partisans who opportunistically grab the crisis as proof the other guy is unfit to govern.
l  Analysts trying to turn one good call into a new business model.
l  One-sided Web sites that never see anything positive; their URLs tend to have “Doom” or “Collapse” in their titles.
It is no coincidence that negative predictions increase after major recessions or market collapses. They are predicting what just occurred, not what is likely to happen.
And they are not making their followers money.

I would agree with that.  While there are some serious issues which must be addressed, I think the gold bugs and hyperinflationists are barking up the wrong tree.  Conspiracy theorists are generally just nuts, and austerity won't help us much, and will probably hurt even more.  The first step to putting the U.S. on stronger fiscal footing should be letting the Bush tax cuts expire.  This will hit most citizens in the wallet, spreading the pain, but it will also concentrate the costs on those who can best afford it.  Cutting spending which helps those with the least, not only doesn't make any sense, it seems pretty cruel to me.  As for investment advice, I find that being a contrarian, but paying attention to broad trends can be beneficial.