Most traders and investors lack the temperament for these radical approaches, finding themselves somewhere in between. Deciding what to consider, how to weigh it and what to ignore is a challenge.
Let's look at some recent issues, with an eye on giving them a bit of context.
Jobs
Every month, we see the fitful responses to the changes in the employment data.
The addition in May of 38,000 jobs --- which doesn't include 35,000 striking Verizon workers -- is at the low end of a monthly range that has been fairly consistent since 2010. We have beaten this topic to death (see this, this, and this), but let me remind readers that the monthly employment situation report has a margin of error of 100,000 jobs.
Then it gets revised, re-benchmarked and re-revised. So we don't know if this was a one-off, an indicator that the US economy is at full employment or the beginning of a recession. My guess is it was an outlier, likely to be revised to between 75,000 and 100,000 or so. But that is just a guess. No one knows yet.
Brexit
If the UK referendum on staying in the EU were to pass, it would cause some headaches for all involved. However, Britain isn't part of the currency union that uses the euro, suggesting to many analysts that much of the negative fallout would land on the UK itself.
For the past few months, the Brexit movement looked like it was going to lose.
More recently, the polls have shifted, making it a much closer contest. My optimistic guess is that rationality prevails when Britons go to the polls on June 23. I am not a currency trader or an investor in U.K. financial companies, so what investors can do with this information is beyond me.
US elections
The presidential contest is heating up and dominates much of the US news coverage. As we discussed, the campaign and the outcome of the election will have some impact on both bonds and equities. However, the claim that election uncertainty is a drag on markets has been greatly exaggerated.
The next US president will be either Hillary Clinton or Donald Trump. There is nothing uncertain about that. There are industries that are more likely to benefit from one candidate or the other, but until the parties have their conventions, polling data is unreliable. There are signs that Trump's primary campaign momentum is slowing. My guess is that, as in 2012, an election that so many think will be close might end up as an electoral college romp.
Zika
I don't want to make light of a serious mosquito-borne illness, but the annual frenzy over the latest global disease outbreak has become an all-too-reliable ritual.
Recall not too long ago that Ebola was going to infect millions -- as was swine flu, SARS, avian flu and, thanks to a few people foolishly opposed to vaccines, measles and mumps.
This is why we have a National Institutes of Health, the Centers for Disease Control and Prevention and the World Health Organization -- to help deal with diseases in developing nations and prevent them from infecting people in the US.
Earnings
I have watched the slowdown in earnings growth closely. Of all the things that are cause for concern, this is my biggest. On the one hand, the energy industry has seen its profits plummet as the price of crude oil fell.
When a sector that once made up 11 per cent of the Standard & Poor's 500 Index has earnings fall almost to zero, it's going to hurt. But that doesn't explain the entire slump in earnings, especially in light of the big share-count reduction that has been occurring because of buybacks. If you are looking for something to be worried about, this seems like the one to watch.
One of the key tasks of an investor is to sift through the blizzard of data, news and information and winnow out the stuff that's just noise. A good first step is to focus on what matters more and what matters less, and to think about why.
Barry Ritholtz, a Bloomberg View columnist, is the founder of Ritholtz Wealth Management. He is a consultant at and former chief executive officer for FusionIQ, a quantitative research firm.
