This was said to me in a discussion on another blog. Here is my answer:

1. One reason not to be cynical about US politics: despite the existence of all kinds of powerful interest groups and periods of great social change, there has not been a civil war in the US since 1865. This is a serious point. Modern politics is more conducive to the welfare of human beings than any previous system. A common mistake of cynics is to compare reality to utopia rather than to the alternatives.

2. Cynicism is a mistake because it always sees the same aspect of a thing. The cynic sees every political act as arising out of the narrowly-defined self-interest of an individual or group. Sometimes this is the most relevant aspect for understanding some act, and sometimes it is not. But the cynic is in love with his pessimistic theories. (And they can be made to fit any set of events — cynicism as pseudoscience).

3. Seeing the right aspect of a thing is a neglected part of understanding the markets. There are people who take in large amounts of information and commentary but still seem to have completely the wrong picture. In macro trading, everybody has the same data and pretty much the same commentary — seeing the right aspect is everything.

Advertisements