Over the many years spent as chief economist and head of investment strategy for a company that eventually ended up in the arms of the giant Deutsche Bank, I learnt a lot. There can be few professions offering quite the same intellectual challenge, quite the same tension as experience battles it out with the vagaries of economies and markets – quite the capacity for falling flat on your face. In the two months since the bank and I went our separate ways, I have learnt even more.
State-of-the-art information systems gave me the world economy at my fingertips, real time, all the time. Dozens of little charts wiggled their way daily from left to right on the screens, showing in an instant how a wide range of commodities, bonds, stock indices, currencies, money market rates and so on were responding to developments outside in the real world.
Great stuff but you need to know how to handle it; data flows like that can kill you if you let them take control. Indeed, the first lesson you learn is about noise; data is incorrigibly noisy, leaping about apparently randomly from one release to the next, throwing out impossible correlations with other series, forever contriving to surprise. We have an alpaca or two like that.
So you do have to look carefully at the data, trying to spot the tiny details that might hint at changes ahead. But it is so much more important to stand back and take a longer view.
This can be quite tough: when you have settled, logical and well-grounded expectations for the economic outlook and the noise in the data seems to paint a different picture, then the line between intellectual integrity and stubbornness becomes hard to define.
But because all this data is buzzing around you all of the time, it is not too hard to keep it in its place. It just takes eight or nine hours a day for five days a week to do it.
Markets, of course, tend not to behave in this rational way; markets love a good panic and commentators love a good story. So as the data ebbs and flows, the economic outlook oscillates from one extreme to another – apparently – and there's always a pundit somewhere on hand to explain why.
What I have learnt in the two months spent wondering who's hidden the pipe, slippers and spaniel is that keeping a grip is much tougher without all that data and the sophisticated systems to handle it.
Unless you are willing (or permitted) to spend as much time at your desk at home as you did in the day job, then the inputs are likely to be headlines and commentary rather than the pure data itself. And here's the problem: what you get, often in the most dramatic tones, is the markets' inconsistencies writ large. Don't blame the messenger; what is reported is what markets are actually saying. Markets don't understand noise but take everything at face value, rational or not. That's why contrarians do so well.
So my first lesson has been this: if the time and technology are not there, then the brain has to work harder and, therefore, independence must be more rugged. If your investment strategy is to stand any chance at all, it is doubly important to stick to your logical view and not be flummoxed by the second derivative of all that noise.
It isn't easy – I had underestimated it – but it can, must, be done. I miss my screens, but am enjoying the challenge. And I have a new respect for the many people I have met over the years who have learnt this lesson before me.
Peter Bickley is a consultant economist