In engineering, noise is a disturbance around a signal and engineers have become good at extracting signals from the noise. In investing, noise comes in many forms and actions are determined by noise, signals or a combination of both. Some would argue that the vast majority of actions are the result of a response to noise and noise traders make it their job. But sometimes noise is difficult to disentangle from a third layer which doesn’t trouble the engineer, namely bullshit (or, more politely, BS) and BS can be a powerful driver of actions too. We all know it is out there but why is there so much of it around? Harry Frankfurt argues that:
“Bullshit is unavoidable whenever circumstances require someone to talk without knowing what he is talking about. Thus the production of bullshit is stimulated whenever a person’s obligations or opportunities to speak about some topic exceed his knowledge of that topic.” There is also “…a widespread conviction that it is the responsibility of a citizen in a democracy to have opinions about everything.”