If I were being polite, I would not argue that we are in an age of lies by politicians, businessmen, or leaders, but what The Economist has called a “post-truth world”. Stephen Colbert described the current environment as one of different levels of “truthiness”.  At best, clarity by leaders and spokespeople is in short supply. Most commentary is done for spin.

Even central banks provide forward guidance to move expectations not just provide factual information on policy views. Long commentary is used when short declarative comments would suffice. Truth is often swept under the rug as commentary is used to skew opinion and revise thinking not just provide information. Truth is increasingly viewed as an impediment to getting a message across, and as something that stands in the way of a greater good. For some, when the truth makes people uncomfortable or adds to complexity, it is dispensed with like clutter.

In a less than truthful world, what is an investor to do? The answer is simple and the basis for any quant or systematic investing. Follow the data. Of course, generated data from government or business can be distorted or revised so the best approach is to use market prices. Let prices tell you the level of truthiness in the market. Let data that are not easily revised tell you where the economy is going. Follow fund and capital flows, not commentary flows.

Being guided by prices does not mean an investor has to have a strict adherence to market efficiency. The markets may get it wrong and may be subject to irrationality but there is no spin and deciphering of honesty. Markets do tell investors that at a particular point in time there is price where there will be exchange. Statistical tools and modeling can be employed to find signals within noise without resorting to digging for the truth. Noise can be smoothed. A lack of truth cannot be smoothed.