Can Irrationality Be Rational?
There is an interesting (albeit flawed) analysis in this month’s New Yorker by John Cassidy: Rational Irrationality. The subject is “the real reason that capitalism is so crash-prone.”
The author’s main point seems to be its rational to pursue profits even in an irrational manner when everyone else is profiting from it. Indeed, to miss out on gains — even ruinous ones that force your firm into bankruptcy — is irrational.
How can we spot the flaw in that argument?
Many children have been admonished as a kid, “If all your friends jumped off the Brooklyn Bridge, would you?” Yet that excuse seems to be the basis for some of the worst, money losing decisions made by the financial sector. All of the cool kids were doing it!
Consider:
“The same logic applies to the decisions made by Wall Street C.E.O.s like Citigroup’s Charles Prince and Merrill Lynch’s Stanley O’Neal. They’ve been roundly denounced for leading their companies into the mortgage business, where they suffered heavy losses. In the midst of a credit bubble, though, somebody running a big financial institution seldom has the option of sitting it out. What boosts a firm’s stock price, and the boss’s standing, is a rapid expansion in revenues and market share. Privately, he may harbor reservations about a particular business line, such as subprime securitization. But, once his peers have entered the field, and are making money, his firm has little choice except to join them. C.E.O.s certainly don’t have much personal incentive to exercise caution. Most of them receive compensation packages loaded with stock options, which reward them for delivering extraordinary growth rather than for maintaining product quality and protecting their firm’s reputation.” (emphasis added)
Pardon me, but the easy choice of aping your competitors ruinous policies is hardly CEO leadership. Sometimes, you have to make the difficult decision, even if it costs you short term. Otherwise, this line reasoning requires one to assume that there is never any “objective reality.” It is herding writ large, only with billions of dollars leveraged up. There is never a good reason to practice risk management, to avoid aggressive speculation when your peer group is so engaged.
For example:
“This was the climate that produced business successes like New Century Financial Corporation, of Orange County, which originated $51.6 billion in subprime mortgages in 2006, making it the second-largest subprime lender in the United States, and which filed for Chapter 11 on April 2, 2007. More than forty per cent of the loans it issued were stated-income loans, also known as liar loans, which didn’t require applicants to provide documentation of their supposed earnings. Michael J. Missal, a bankruptcy-court examiner who carried out a detailed inquiry into New Century’s business, quoted a chief credit officer who said that the company had “no standard for loan quality.” Some employees queried its lax approach to lending, without effect. Senior management’s primary concern was that the loans it originated could be sold to Wall Street. As long as investors were eager to buy subprime securities, with few questions asked, expanding credit recklessly was a highly rewarding strategy.”
I disagree. Chasing short term profits regardless of cost is not “Rational Irrationality” — its short termism of the worst kind. And if it ultimately leads to your firm’s liquidation, how rational is that? That is the equivalent, IMO, of suggesting you can set the race track record on the straight away, ignoring the hairpin turn at the end. So what if you smash into the wall! You were, for a moment, winning!
“Rational Irrationality” asks us to ignore the repercussions of our behaviors. We can rationalize short term gains at the expense of long term losses, because we need to obtain quarterly profits regardless. Apparently, when it bankrupts the company, only then with the benefit of hindsight can we see what went wrong.
I am terribly sorry, but that is precisely the sort of thinking that led to the crisis in the first place. Making loans to people who cannot pay them back is not rational when its profitable — its NEVER rational.
Goldman Sachs avoided most of the credit debacle — were they being irrational when they forewent short term profits for a few years — but avoided the worst of the sub-prime debacle? And what about hedge fund manager John Paulson? His fund bet against all of these other players, netting several billions in profits while others suffered from their “Rational Irrationality.” How irrational was Paulson’s investment posture?
On a risk adjusted basis, the behaviors of Citi, Bear, Lehman, New Century and others was hardly rational. Call it whatever you want, but do not forget this simple fact: It was the sort of narrow, risk-ignoring thinking that is ALWAYS rewarded in the short term, and ALWAYS punished in the long term.
~~~
One last thing: The article also manages to get through the entire subject without so much of a mention of Hyman Minsky, the economist behind what has become the definitive theory of why Capitalism is so crash prone: Stability breeds over confidence, which breeds instability. See Stephen Mihm’s aricle, Why capitalism fails for an excellent discussion of the same. Perhaps understanding that aspect might provide the reader with greater insight than rational irrationality does . . .
>
See also
The synchronous lateral excitation of markets (or pseudo-wobbles)
Paul Murphy
FT Alphaville, September 29, 2009
http://ftalphaville.ft.com/blog/2009/09/28/74351/the-synchronous-lateral-excitation-of-markets-or-pseudo-wobbles/
Source:
Rational Irrationality
John Cassidy
New Yorker, OCTOBER 5, 2009
http://www.newyorker.com/reporting/2009/10/05/091005fa_fact_cassidy
September 28th, 2009 at 10:53 am
I’ve been saying this for years: we are “competing” ourselves into oblivion.
September 28th, 2009 at 11:06 am
The extensive investment in derivatives in recent years means, essentially, that all the big financial institutions were making money (or thought they were making money) off each other, not off any ‘primary’ investments.
Obviously, they cannot all make money off each other. And here we are today.
September 28th, 2009 at 11:14 am
At a corporate business level, this is terribly flawed. At the retail investment level, it works like a charm. Again, I keep advocating buying on any dips of 2-4% since that’s as deep as any pullbacks were and continue to be. Once again we saw a 2-3% pullback only to be met with buyers. This has worked on all three pullbacks since July.
On that level, yes follow the crowd to make money.
September 28th, 2009 at 11:16 am
Hey, Harry,
How far did RIMM pull back?
September 28th, 2009 at 11:17 am
Completely agree Barry. This is the exact sort of thinking/behavior that led us into this crisis. The only thing that makes this sort of thing rational is on a personal level for the CEOs of large public companies. Because they are scrutinized on a short term basis they are essentially forced to make short term decisions. If they make the right choices that will be beneficial for the long run but in the short term their firm trails its competitors the CEO will be thrown out quickly. IMO that is the main problem, the immense amount of pressure and focus applied towards short term results by wall street investors (if you can even call them that).
September 28th, 2009 at 11:19 am
Don’t know. I stopped out on it as I said several times at -4%. AAPL continues its run nicely.
September 28th, 2009 at 11:25 am
Hey Harry! Was wondering when you were going to pop up with the 2-4% limit to the pullback.
We have some exciting economic news scheduled for release this weekend. Care to take a crack at how they’ll turn out? I, for one, am waiting with baited breath to hear what you have to say.
September 28th, 2009 at 11:25 am
This week – sorry. Still on my first cup of coffee
September 28th, 2009 at 11:27 am
…by extension, there then “must” be superior returns available to contrarians, over the long haul.
September 28th, 2009 at 11:31 am
After examining the numbers over the weekend, it’s very clear that the housing numbers were not that bad at all. That’s part of the reason there was no follow through on that news. I was off considerably on Durables though.
This biggest news this week is the Employment Situation. Consumer confidence we already heard so that’s a non issue. Case Shiller, we just go the housing numbers. GDP is the third revision, so no news there. We got a glimpse into ISM last week, so that should be strong.
Most of the economic news this week is pretty much known. No negative market movers there until the reports on Friday. ISM should be strong and we know that employment can’t be worse since layoffs have dropped off sharply.
September 28th, 2009 at 11:34 am
The indices lead the way.
September 28th, 2009 at 11:35 am
RIMM as I mentioned in my last week post might try to close the gap from April. But that might take some time. I wouldn’t mind playing a bounce around low 60s.
Market is on steroids again
September 28th, 2009 at 11:38 am
Certainly irrationality can be rational. A single man storming a machine gun nest. Betting in Vegas even though you know the odds always favor the house. Going out on a blind date. Harry’s parents deciding to have more kids after they saw Harry…
September 28th, 2009 at 11:43 am
manhattanguy: Yes, the market is on steroids and it continues to be the easiest market in my life time. As everyone here knows, I keep suggesting that we will not see anything stronger than 2-4% pullbacks through this year. That pattern was successful once again on the indices. And, as I’ve stated since July, I don’t understand why people get so pissed about it either. It’s easy money. Participate. You know, yes, know, it’s going to end the year higher. Yet for whatever reasons people choose to complain about the market going up rather than profiting from it.
September 28th, 2009 at 11:44 am
Rational Irrationality: In a closed system, rational decisions by subjects can, or even must, lead to irrational outcome.
Lets assume the stock market is a closed system. If you took the rational decision to sell just when things look dire (ie September 08 – March 09) and bought when the outlook was bright, you would underperform.
September 28th, 2009 at 11:48 am
“Rational irrationality” is just an oxymoron hook in the title of an article that’s conflating different important issues.
1. Industry-wide standards (or lack thereof) provide “cover” for corporate behaviors.
2. “Irrational” is economist/analyst code for “we don’t know why people behave this way.” Human rationality is not defined by profit-seeking behavior in business pursuits. That’s an ideological position, not a scientific one. A big reason why we’re seeing the ascendancy of behavioral economics and the decline of Chicago School nonsense.
September 28th, 2009 at 11:49 am
@HW: While I don’t agree with you on your Economic recovery thesis, I agree markets might continue to go up based on “false hopes”.
As long as you have tight stops, you can surely play the market from the long side. I have two longs – $UCO and $RAX against shorts in $COF.
September 28th, 2009 at 12:02 pm
I don’t understand why BR is arguing against “Rational Irrationality” since it is NOT mutually exclusive with Short Termism as he implies. The two are self reinforcing.
Whenever you are gambling with somebody else’s money, it skews the reward/risk. Doh.
I submit say the underlying cause of our economic demise is Moral Hazard. The people making the risk decision were decoupled from the loss. That goes for the TBTF banks, the rating agencies, the executives at the irresponsible shadow banking institutions (like Angelo Mozilo, Richard Fuld) etc.
We have a economy that is based on musical chairs. Now we are getting down the the last couple of chairs and its getting hard to find a place for everybody to sit.
September 28th, 2009 at 12:02 pm
Market going up? It seems obvious to me that it is all the terroristic long buyers that are trying to bubble up the market! When will the SEC (and other powers) step in and halt all the long buying????
September 28th, 2009 at 12:05 pm
BR: “That is the equivalent, IMO, of suggesting you can set the race track record on the straight away, ignoring the hairpin turn at the end. So what if you smash into the wall! You were, for a moment, winning!”
Love that analogy! It would be even more apt if it was a bus full of nuns and other innocents and the driver (CEO and other top execs) had an ejection seat and parachute to get out at the last minute, while the rest burned to ashes. Then he walked away with a smirk on his face recounting the rush he got while setting the record (and counting his cash, of course).
September 28th, 2009 at 12:11 pm
The driver gets a big bonus for setting the record, of course!
September 28th, 2009 at 12:20 pm
[...] little to do with “greed, overconfidence and outright stupidity.” (New Yorker also Big Picture, FT [...]
September 28th, 2009 at 12:27 pm
i think you’re off the mark here barry. “rationality” for the most part is relative. if i’m not mistaken, most of the banksta executives still made out fine financially, even though their firms may have gone under. so it was quite rational as far as they’re concern. would going back into a burning house (knowing that you’d face certain death) to save a loved one be rational? and what if that “loved one” was your dog fluffy? still rational?
September 28th, 2009 at 12:31 pm
My experience from the bowels of a small but profit (commissions) hungry firm is that to a man the suits hated everyone who made more money than they were making. Most hated were the movie and rock stars who made money it was thought the moral degenerates didn’t deserve. Everyone bragged about making more money than the president, more than any record company exec, and from time to time more than even Madonna. Nobody thought about tomorrow until five minutes before midnight.
September 28th, 2009 at 12:32 pm
What you have is personal interests not aligned with the interests of the firm. You make money, firm goes bankrupt, you still have the money.
Consider the mortgage broker who refused to originate liar loans. He wouldn’t have been able to loan as much, and the customer would go to the guy in the cubicle next door. How long could he hold out? It was at the top that the complete disregard for underwriting came.
September 28th, 2009 at 12:34 pm
I would also say that accounting tricks allowed profit to be booked on cash that would trickle in month-by-month. The same single action brought profits yesterday and huge losses today – something wrong with the accounting.
September 28th, 2009 at 12:46 pm
It’s all about culture. The herd just follows what our “leaders” are doing in gov’t, corporate, religious, and other sectors. It’s all about getting rich as quickly as possible. Nothing else matters.
September 28th, 2009 at 12:53 pm
HarryW, if you doubt the value of TA you should check out this very simple case study of RIMM’s recent action:
http://www.youtube.com/watch?v=AUZv6lk9eq4
Great example of simple TA at work.
September 28th, 2009 at 1:05 pm
it’s all good-
stocks up- economy must be stellar-
times could not be better- the rational man goes all in on this sure thing-
makes me proud to be an American-
tackling tough issues- who needs that- with the Fed there to lead the way to new prosperity
September 28th, 2009 at 1:08 pm
Is it rational irrationality or irrational rationallity. I don’t know, but here’s what I’ve seen.
The big pay (those $100 million pay days must have been earned, and deserved how else would they be tapped as one of the chosen few to be so wealthy) is based on quarter to quarter profits (which translate into stock prices and that ultimate slot machine payout for stock options). So who cares what “might” happen a year or so down the road. Leverage/risk/derivatives/creative accounting are good moral capitalisitic endeavors. Just ask Greenspan (or better yet read his book Age of Turbulence) . The whole system including dynastic wealth passing down to the next generations was set up to make the few rich. It worked. So I’d say it was completely rational.
September 28th, 2009 at 1:10 pm
ItalicBold: RIMM is down because they missed on revenue and gave a poorer outlook than expected not because of the chart. If RIMM beat, that entire analysis goes out the window. That’s the problem with charts.
September 28th, 2009 at 1:16 pm
ahab: check out this excellent article: Hamilton: Consumers Are Alive & Well and Have Been All Along http://www.cnbc.com/id/33057218
It’s pretty much what I’ve been saying regarding the consumer. I think too many people are caught up in the “consumer is dead/closed wallets” mantra just like they’re caught up in the “money on the sidelines” nonsense. No, the economy is not stellar but it’s growing and, as I’ve been saying, we’re about to enter a mini economic boom phase.
September 28th, 2009 at 1:21 pm
Barry,
normally agree with you 100%, but I think you’re missing the point here. There’s a reason that people like you weren’t running big firms. And if you had been, and refused to book the “easy profits” that mortgage securities and derivatives were seen as providing, you would have been fired.
The fact that you can only cite Goldman as a contrary example is telling. I’ll leave it to others who’ve studied Goldman’s BS more closely than I, but isn’t it the case that Goldman was in fact heavily exposed to mortgage and other credit assets? But they got the AIG lifeline and shifted out of their exposure in late 07 (when many, but not most (see, e.g., Chuck Prince), Wall Streeters were beginning to see the iceberg ahead).
Not sure what you do about the “cool kid” crowd mentality. And I think that jumping off the bridge is a bad analogy. It’s more like getting a bunch of tattoos of your favorite pop-punk band and then smoking up crack and meth because everyone else is doing it. Where the consequences aren’t as immediately apparent to the juveniles on Wall Street and in the media, but the “benefits” are.
~~~
BR: Its GS, it was jamie Dimon, and it was every other partnership that was not public.
September 28th, 2009 at 1:25 pm
HarryWanger,
simple question for you.
Who’s going to buy the stuff that your public companies are selling? The overly indebted American consumer? The austere Europeans? The underpaid and export-dependent East Asian countries?
I guess that’s questions, not question. But having just experienced an economic crash that was supposedly impossible according to the sophisticated quant guys and the Newspeak they spoke, I’m a little curious as to whether you can describe in plain English why you think the consensus that we’re going to experience an extended flat “recovery” or possible a double dip is incorrect.
September 28th, 2009 at 1:27 pm
@HW: Agree TA alone cannot be used to predict a stock price.
But I would also add that this market is not going up because of great fundamentals. It’s going up because of Fed’s liquidity support and bunch of investment banks buying it on false hopes. This rally will collapse in the near future.
September 28th, 2009 at 1:27 pm
useless article Wanger- basically says nothing- the writer should be fired for writing somehting so vapid and uninteresting
September 28th, 2009 at 1:32 pm
Keynes pointed all this out long before minsky. In fact, mercantilists as early as the 16th century were writing about the same thing. We have to ‘rediscover’ this shit every 50 years.
September 28th, 2009 at 1:33 pm
@HarryWanger, I disagree. The TA was warning that the market expectations of beating earnings was heavily and unrealistically priced in. The market was expecting nothing less than an earnings beating.
I thought you studied short term candles anyway?
TA is all about probabilities, its STATS 101. It wont always be right, but if you have a bunch of indicators you have found to be reliable all pointing towards the same thing you generally have a high probability of predicting market action. As he said in the video at the vary least you should have considered moving your stop higher. After all if the earnings DID beat your stock would have done nothing but rocket right? A 4% loss is a pretty loose stop….
September 28th, 2009 at 1:35 pm
“This rally will collapse in the near future.’
puleeease- with the Fed there- watching your back- productivity going up (who needs employees)-unemployment leveling off because people falling off the rolls-
all good signs- who said 20% unemployment is not good for the economy-
silliness- revenues will continue to increase- not sure how – but it’s going to happen- the stock market is predicting so- so it must be true
September 28th, 2009 at 1:39 pm
and all you doubters out there- H Wanger has this shit down cold- all the data coming out this week- better than expected- Harry said so-
he knows what he’s talking about- I’m sure of it
September 28th, 2009 at 1:40 pm
Dow 10k and S&P 1100 looks inevitable
September 28th, 2009 at 1:42 pm
HarryWanger Says:
“ItalicBold: RIMM is down because they missed on revenue and gave a poorer outlook than expected not because of the chart. If RIMM beat, that entire analysis goes out the window. That’s the problem with charts.”
_______________
“If RIMM beat . . .”
But they didn’t.
Hadn’t it already been determined the RIMM had missed its (the street’s?) estimates before you made your ill-fated buy? Isn’t that the problem with making over-broad statements concerning what, exactly, is driving this insane (irrational) bull and what will happen in the future? Keep buying the dips Harry, and someday soon, the biggest dip of all will own you.
September 28th, 2009 at 1:46 pm
Rationally-irrational-rationality: So, your peers start doing something stupid on a massive scale and you can see that they are getting huge short-term gains but you also, because you are so smart, know they are headed for calamity. If it were the case you had a little bit to play with to dip your toes in and, gasp, try and time the market a bit: obviously go for it. Someone suggested that above (“you know the year will end higher”).
On the other hand, you might know that while your peers are headed for calamity, your portfolio is solid, man, solid. So, bite the bullet and under-perform for a little while, then come out smelling like a rose.
On the third hand, you might strongly suspect that your peers are not only setting *themselves* up for a world of hurt, but that your own portfolio – once solid, man, solid – is going to be collateral damage. Then you have little choice but to try to beat your peers at their own game for short-term liquidity, and meanwhile buy up the sleepers that you reason will be the next solid portfolio down the road.
Alas, we don’t hear the CEO’s and other fiduciaries saying that. We hear them saying they just couldn’t get away with not going all-in to take some of those profits. So, Barry is right about the CEOs but there are cases when irrational rationality, so to speak, is the right bet.
September 28th, 2009 at 1:48 pm
I think the “rational” part to the rational irrationality, aside from banking personal short term profits from gambling opm long term is summed up with the familiar aphorisms:
The market can stay irrational longer than you can stay solvent.
and
Being too early is indistinguishable from being wrong.
Of course, you can just stick to deep value no-debt long positions and never do too bad, but you probably won’t end up attracting tons of money.
Additionally, there are a number of things that we all do right now that are economically speaking “rationally irrational” Accepting federal reserve notes or electronic notations as payment for real things is a big one.
September 28th, 2009 at 1:53 pm
how can everyone miss one of the most important reason why capitalism failed in USA.
private profits….public risk…public loss.
usually 95% of a company are owned by shareholders(mostly mutual funds and pension funds…who always want to be nice with management of companies)
95% of profit is wasted/spend based on the whims of management…who get huge bonuses if there are profits…and they use to acquire and grow bigger…or simply on corporate jets etc…you get the picture.
to above you can also add…that management use that public profit to buy washington influence….and there you go perfect for the select few who managed to cash out by selling their shares to public and become billionaires but still enjoy all the benefit and no risk.
BTW why does shareholders cannot demand accountability from management? (lets say some company has 35 billion in cash…its completely at the whim of the management to do whatever they want with it…most of the times paying upto 70% premium for some company…..just to get a boost to their ego)
September 28th, 2009 at 1:53 pm
This is such a ludicrous Alice in Wonderland moment in the markets that normal discussions of rational or irrational behavior should be suspended until reality reasserts itself.
It was rational (not at all irrational) to follow the liquidity when the FED began QE. Now that they are making vague noises about reverse repos it is less rational to buy into an overvalued market.
But: “the market can stay irrational…” etc.
September 28th, 2009 at 1:56 pm
If a bunch of insane people have a great deal more liquidity than you do, then it’s best to go with the flow, or take your ball and go home. That’s the problem with the market these past few months. You have no idea when it will end, but I’m guessing that when it inevitably does, it will be very ugly…
HCF
September 28th, 2009 at 1:56 pm
ahab: “useless article Wanger- basically says nothing- the writer should be fired for writing somehting so vapid and uninteresting”
Why? Because it doesn’t fit your doomsday scenario? See that’s the problem with the Failure Caucus, they refuse to believe, even when facts like those in the article are presented, that we are seeing growth. That’s why they don’t participate in the “fake, irrational” rally and miss out on big profits.
September 28th, 2009 at 1:58 pm
Marcus Aurelius: As I have said, and it’s been proven to be correct again, buy any shallow pull backs of 2-4%. It’s happened 3 times now since July and advanced every time.
September 28th, 2009 at 2:00 pm
LB – Yet we’ve seen this before, pets.com, etc. How long did the .com mania go before that finally imploded? I’ve said before and I’ll say it again, this market can go up as long as it’s going to go up. Whether it makes sense or not is irrelevant. What I would imagine is the most important aspect of this market for traders is to decide whether or not you want to play in it, and if you do, how long do you want to play it? Very scary, are we going to go up for another two months? Or another two years?
September 28th, 2009 at 2:01 pm
Is this “rational” or “irrationally rational”? Me-thinks the former. Sorry Ben, but your grand experiment is going to fail unless/until you some trust & confidence comes back to our system.
In order to get people to spend (and not save or hoard cash), the majority of people need to have REAL, lasting confidence that the rug isn’t going to be pulled out from under them at any moment in their job, their investments, their health care, you name it, by a corrupt system run by corrupt players. Until that issue is sufficiently addressed, we are nowhere regardless of where Wanger’s la-la land markets go.
September 28th, 2009 at 2:01 pm
Sorry, I’m so irritated (again), I forgot to post the link:
http://www.calculatedriskblog.com/2009/09/pimco-personal-saving-rate-to-exceed-8.html
September 28th, 2009 at 2:02 pm
manhattanguy: You are correct, Dow will take out 10k easily and SPX will do the same with 1100.
Barry: Didn’t you add QID last week. I remember stating that if you did, it would need a very tight stop. Hopefully you exercised that stop.
September 28th, 2009 at 2:08 pm
Harry your undying optimism is almost infectious and you are a much more interesting person when you state what your beliefs are, whether right or wrong they are your beliefs.
I read the CNBC article you posted and a few questions
Article: “This news, along with most other news in the last year, suggests that until now”
Until NOW!
Article: ”consumers have been largely dormant, paralyzed by fear through the course of the recession.”
Paralyzed by fear.
Article: “Sales have declined for many major retailers and small businesses; this is not a point that can or will be contested”
Sales decline can not be contested.
Article: “Instead of going on vacations, buying expensive jewelry or buying new cars people are indulging instead in going out for dinner and drinks”
Instead of buying cars
Article: “These are all manageable purchases that have been kept in the budgets of many consumers.”
Kept within the budgets of many consumers
It also states a number of percentages, but does not say what that percentage is compared to, Case in point if your Detroit Lions win a game this year they can be considered 100% better then last year, but as a team or franchise are they truly better?
I hope things get better with a more frugal consumer leading the way.
But I am also realist enuff to know, in a large part, consumer debt has allowed the economy to grow over the last few decades.
A consumer who is willing to repair their jalopy instead of getting a new car, is not going to lead to a robust economy. A consumer willing to take on new debt and purchase that car will.
I believe many of the people on TBP do not share your optimist view point, because they feel the consumer needs to pay off the MASIVE amounts of debt they currently own, before they can seriously concider taking on new debt.
It is amazing that two people can read the same article and come away with two completely different points of view.
And I find it hilarious that you are giving trading advice to the man, who not only wrote a book and is getting national exposure, but who also created this blog – I hope you put tight stops with RIMM
September 28th, 2009 at 2:08 pm
Mannwich: Did you read the article I posted about consumer spending?
September 28th, 2009 at 2:10 pm
@Mannwich: Is it just confidence though? Don’t people need jobs and/or availability of easy money to come back and play their “consumer” role in the economy?
September 28th, 2009 at 2:12 pm
franklin420: I’m not giving trading advice to Barry, I simply stated that he bought QID last week. At the time I stated that I hoped he had a tight stop since the markets, especially the COMP, would continue higher. And yes, I did have a tight stop on RIMM as I stated when I made the buy.
September 28th, 2009 at 2:13 pm
@manhattanguy – Don’t be silly…..
September 28th, 2009 at 2:16 pm
@ Harry you did NOT state it when you made your buy, you stated it after the fact.
“You should wear a helmet when riding a bike” – is advice.
“it would need a very tight stop” – Sounds like advice to me
September 28th, 2009 at 2:19 pm
Today is highly unusual, but you would only know it if you look at FX and Treasuries as well as the SPOOS.
I remarked on Macro Man today that this is CORRELATION BREAKDOWN, the spx divorced from EUR:JPY and EUR:USD, when correlations start to break, VIX often jumps.
Today could finally be the day – JOHNNY retail and harry WANGER going long, with the HEDGIES and IB DESKS sitting in cash and Treasuries waiting to SHORT the crap out of the market.
Johnny and Harry – naked longs…?
September 28th, 2009 at 2:20 pm
@manhattan: Real confidence (and thus a REAL recovery) FOLLOWS a structure/system that is not perceived to be rigged against the average person where there are enough good-paying jobs, access to affordable health care, etc. There’s a real sense deep down that things are terribly broken right now. All the money machinations by Ben & co aren’t going to change that.
September 28th, 2009 at 2:22 pm
@HW: No.
September 28th, 2009 at 2:25 pm
As Barry Ritholtz states “Goldman Sachs avoided most of the credit debacle.”
REALLY? What about the calendar month which never made it into their quarterly reports? Where would they have been without government bailouts of their counter parties?
Are you quibbling with calling the behavior of corporations rational when it is self desctructive longer term? Because, I will tell you, having worked for corporations for over many decades, at many stages of developments in the lifecycle of a corporation, THEY ARE OFTEN SELF DESTRUCTIVE. And they always ape the “successful” behaviors of their competition, and they always copy the unsuccessful behavior of the leaders in the industry. I don’t think I need to provide examples.
Is it rational to pad your pockets with profits and step off the bus with your golden parachute before it drives off the cliff? Probably, in this culture, definitely.
September 28th, 2009 at 2:25 pm
franklin: Actually I stated it in a post probably 2 minutes later when the stock was actually up from my buy.
leftback: I’ve stated that on each dip I’ve been adding to positions, mostly index efts. Only lone equity is AAPL right now. And, as I stated at the time of that AH dip, I added more. I move my stops up accordingly.
Mannwich: “There’s a real sense deep down that things are terribly broken right now.” Not from the people I’ve been talking to. Actually that sentiment seems to only apply to this and other bearish boards.
September 28th, 2009 at 2:30 pm
@MW: I agree there is a sense that things are broken right now. But my point was that in order for people to gain confidence they need to have the means (food, clothing & shelter – from maslow basic needs). So without the job situation improving, we are not going to see a full scale recovery for a while. We are referring to “consumer confidence” and not the confidence in the structure/system.
September 28th, 2009 at 2:31 pm
If it is rational to be irrational, I should stop ignoring the neighbor’s dog and do what he tells me to do.
September 28th, 2009 at 2:38 pm
@manhattan: I totally agree. The jobs piece of it is enormous, probably the biggest factor in real confidence returning. It’s not just people who are out of work either. I would argue that the crucial piece is that those who have jobs right now maintain their confidence tocontinue spending (and not hoard for a rainy day) their cash. Ben & co have put a bandaide on things. That’s really it.
September 28th, 2009 at 2:38 pm
“There’s a real sense deep down that things are terribly broken right now.”
I agree with this. Structurally things are held together with duct tape.
“Not from the people I’ve been talking to. ”
To whom and where are you talking, Harry? Things are good in DC and NY areas but the Midwest is in dire straits. CA is OK in the wealthy areas and dead in the agricultural Central Valley. Exurbs everywhere are struggling.
September 28th, 2009 at 2:40 pm
I recently saw an interview with William K Black where he discussed this sort of thing. If you dont play along you miss your numbers and get fired. For many people there is no long term. Or no job. On the other hand he did have a name for this sort of corporate culture. I’m pretty sure it included the word criminal…
~~~
BR: Then you suck it up and resign.
Vee ver jest vollowing orders is not a valid excuse.
September 28th, 2009 at 2:40 pm
winston Says-
“I should stop ignoring the neighbor’s dog and do what he tells me to do.’
dude- that’s a bit weird- you’re scaring me D:
September 28th, 2009 at 2:41 pm
I feel better now and will just use Wanger’s anecdotal evidence that all is well again. Talk about rational irrationality or rational (willful) ignorance. Good grief.
September 28th, 2009 at 2:44 pm
mannwich-
finally- you understand-
it’s 1984 all over again in 2009-
new version “I Love H Wanger”
September 28th, 2009 at 2:49 pm
Mannwich: And it’s rational in your mind that your anecdotal statement that “There’s a real sense deep down that things are terribly broken right now” is absolute?
Leftback: I’ve been talking to people everywhere. I travel around the country frequently. It’s even amazing to me how optimistic people have become. They believe the recession has ended, for the most part, and not “terribly broken”. Even in Detroit the mood has changed with many. Had a conversation this weekend with a childhood friend still living in the area. He’s gone from gloom of late ‘08 to outright optimism.
September 28th, 2009 at 2:56 pm
Simple question, Harry:
Under what condition(s) would you no longer be so bullish?
HCF
September 28th, 2009 at 2:56 pm
@Mannwich 2:38 yea, you can put me down as “hoarding for a rainy day”
September 28th, 2009 at 2:59 pm
You can boil the New Yorker article down to this: Even tho you just filled your gut with berries, when you see a baby gazelle that has lost it’s mother you should kill and eat it also. You can take the primate out of the jungle . . . Where he falls down is (the writer) he doesn’t point out a lot of people made a lot of money(and kept it) take the other side of the irrational bet.
September 28th, 2009 at 3:04 pm
“outright optimism.’
so what’s the good news?
also- that article sucked – said absolutely nothing and could have been reported by a middle school journalism student for the lack of information it contained- and-
please- Harry- don’t waste my time unless it has some meat to it- but i can see why you liked that “well crafted and researched” article- no real data-
ZzZzZzZzZzZzZzZzZz
September 28th, 2009 at 3:07 pm
HCF: If we see quarterly reports that aren’t showing actual growth, I would not be so bullish. But I can’t see that happening for the next couple of quarters for the simple fact of inventory restocking. That alone is going to create the near term mini boom I keep talking about.
September 28th, 2009 at 3:07 pm
“It’s even amazing to me how optimistic people have become.”
It’s late summer, it’s human nature. Debbie lost weight and has a tan; Johnny made back some of his losses.
“He’s gone from gloom of late ‘08 to outright optimism.”
So he’s a great market timer… most people have the same flaw, Harry. “Greedy/fearful..” – you know the quote.
Taking taxpayer money and shoveling it into bankers’ pockets means that this system is BROKEN.
September 28th, 2009 at 3:09 pm
ahab: “Harry- don’t waste my time unless it has some meat to it- but i can see why you liked that “well crafted and researched” article- no real data-”
Huh? Seems to me there was a lot of real data in that article. That was the whole point of it.
September 28th, 2009 at 3:13 pm
Harry did you read my entire reply about that article or just the part where I was laughing at you for giving Mr. Ritholtz such out standing trading advice.
If you read the whole reply you will see the where I refuted any and all data points in that article.
September 28th, 2009 at 3:17 pm
@Harry:
YoY comparisons will be easy for public companies through Q4 of this year, but the bar will be much harder to jump over beginning next year. Any shortfall in expected growth, be it in quarterly earnings or GDP, and I think markets will pull back much more violently than you seem to believe.
HCF
September 28th, 2009 at 3:17 pm
HarryWanger Says:
“I travel around the country frequently. It’s even amazing to me how optimistic people have become. They believe the recession has ended, for the most part, and not “terribly broken”.”
______________
These are different people than those who swallowed (hook, line, and sinker, I might add) the idea that real estate never goes down, right? The wisdom of crowds.
September 28th, 2009 at 3:19 pm
I was thinking of buying couple of ADR’s for quite some time. Some how, never able to make a trade. One of them went up by 2 times. Lack of confidence is a big undoing.
September 28th, 2009 at 3:25 pm
“debbie lost weight and has a tan…”
LOL!
You’re killing me Left!
September 28th, 2009 at 3:26 pm
HCF: “Any shortfall in expected growth, be it in quarterly earnings or GDP, and I think markets will pull back much more violently than you seem to believe.”
No, I believe there would be a violent pull back if those earnings or GDP are bad. But I don’t see that happening any time soon. Growth is going to look strong for a lot of companies for the inventory story, which in turn will create surprisingly stronger GDP for at least the next couple of quarters. A mini economic boom.
September 28th, 2009 at 3:33 pm
I-Man: Debbie tends to gain a few back over the winter.
A few too many sliders, Michelobs and Twinkies™, and there’s that big lunch with the girls at Cracker Barrel.
Then it’s time for those elasticated waist trousers .. but by then it’s February and she looks like Michelin Man.
September 28th, 2009 at 3:33 pm
i have a prediction for you Harry-
you will keep coming to this site as long as the market holds up- but you won’t be back after hit takes a big hit and stays down for the count for a while-
you will be hiding under a desk somewhere- wondering what happened to the good times- you know- the easy money-
you won’t be here telling us the “indices will lead the way” after that – will you Harry?
September 28th, 2009 at 3:34 pm
Not like JOHNNY is svelte, by the way. Joseph A Bank has some special sizes for him, American tailoring.
September 28th, 2009 at 3:37 pm
ahab: Your prediction is wrong. I can’t take a big hit. I’m up substantially on this rally and keep placing trailing stops higher and higher. If there is something in earnings or GDP that indicates a turnaround, I’ll call it when I see it. I won’t have a reason to hide under a desk. This rally has guaranteed me a very handsome profit already.
September 28th, 2009 at 3:38 pm
In a game of musical chairs, you may think you are protected by buying an option on a chair. Before you need to exercise that option, it would be prudent to determine if there are more options than chairs.
More people could have saved themselves if they understood and acted on counter party risk.
September 28th, 2009 at 3:42 pm
Today’s indices confirm the bullish trend especially when considering the move in the dollar. Impressive day indeed. Indices started out of the gate high and stayed there all day EVEN with a strong upward move in the dollar. That should at the very least make any remaining bears shaking in their boots..
September 28th, 2009 at 3:44 pm
And how about tomorrow Harry, what’s tomorrow look like?
September 28th, 2009 at 3:48 pm
WOW Harry – I would almost think you are not replying to me on purpose.
Good thing I don’t have any feelings……….
September 28th, 2009 at 3:48 pm
“That should at the very least make any remaining bears shaking in their boots..”
why? are you under the impression that people here are short? They are more than likely cash or long. That someone has a long term bearish view does not mean they are short the market-
so tell me again- why are bears shaking in their boots?
and a person is a bear Harry- because they do not like the macro picture for the economy as well as the country-
but i doubt you even know what i’m talking about
September 28th, 2009 at 3:48 pm
Thor: I’m looking for a good day tomorrow. Perceived bad news on Friday couldn’t bring this market down and tomorrow we’ll get good news from Consumer Confidence. Indices are rising strong on good news and barely moving down on negative news. Trend is still 100% in tact and heading higher.
September 28th, 2009 at 3:48 pm
The indices will lead tomorrow, Thor.
September 28th, 2009 at 3:51 pm
LB – Amusing isn’t it? Purely for the hilarity of it, of course.
September 28th, 2009 at 3:53 pm
franklin420: I’m sorry but I guess I didn’t see anything in your response to the article that actually refuted anything in the article. He’s saying the consumer isn’t dead and is trading off to other purchases which, judged from your remarks, you seem to agree with.
September 28th, 2009 at 3:56 pm
leftback: Where did I say the “indices will lead”?
ahab: I would venture to guess that many here are either in cash or got burned in short positions over the summer. I doubt there are many long positions here.
September 28th, 2009 at 4:03 pm
ok- let’s assume that’s true- just for the sake of argument- but still
why are the bears shaking in their boots?
September 28th, 2009 at 4:03 pm
i don’t know why you guys are tag teaming on the wanker. dude’s making $$$. isn’t that the whole point of playing in t he market? you guys actually sound silly bashing him now when he’s actually been right staying in this rally. bash him when he’s wrong. don’t get me wrong, i think he’s way off on his macro view.
September 28th, 2009 at 4:05 pm
Based upon the last moves off of these shallow pullbacks, we should have a pretty clear run to 10,200-10,400 area before repeating the 2-4% pullback.
September 28th, 2009 at 4:07 pm
Bubba – if you can’t figure out why they bash HW, or be bothered to go back within past threads to read their many explanations why ask?
September 28th, 2009 at 4:07 pm
ahab: the market has moved higher as the dollar moved lower. Last week when the dollar gained strength mid week, the indices moved lower. Today the dollar had a fairly strong move upward and stocks followed along. That signifies strength and confirms the bullish trend. If you were thinking of or were short, that would have you worried.
September 28th, 2009 at 4:07 pm
@bubba: I agree to an extent, but the certitude (and lack of humility), and lack of cogent arguments to back up his “Big Picture” outlook is a bit aggravating. I couldn’t care less about the markets. I’m not a trader. I just want a return OF my principle at this point.
September 28th, 2009 at 4:08 pm
not tag teaming anyone-
doing it on my very own-
what other’s do is their business- and if they are so inclined to criticize Mr. Wanger- who am i to say no
September 28th, 2009 at 4:09 pm
bubba: thanks. Yes, it’s difficult to understand how or why you bash someone who keeps telling you to buy on shallow dips of 2-4% so you can make some money. We even saw it happen last week, yet for some reason, they just don’t seem to get it.
September 28th, 2009 at 4:10 pm
@bubba: There you go. Need more reason? The know-it-all certitude is annoying as hell (t0 me). If it doesn’t annoy you, then that’s your prerogative. The fact that it annoys me is mine.
September 28th, 2009 at 4:10 pm
but mannwich, like him or not…the guy’s been right (and more importantly, making $$$$) — gotta respect that. no? i’m not defending him by any stretch, but it just seems silly to me.
September 28th, 2009 at 4:12 pm
harry-
ok bubba’s right-
what the fuck was i thinking-
sorry bubba- i will try to live up to your expectations next time
September 28th, 2009 at 4:12 pm
Mannwich, why do I need cogent arguements when I have the indices on my side. Some day the consumer will get back to borrowing like they should and we will have mini booms all over the place.
Besides making coming up with cogent aruments will destract me from being self rightous and boring.
September 28th, 2009 at 4:15 pm
bubba – He’s been wrong (very publicly) quite a few times. Read the threads.
September 28th, 2009 at 4:15 pm
@Harry:
It’s 1 friggin’ day that the “normal” dollar vs. stocks correlation didn’t work… Aren’t you drawing too large of a conclusion from 1 data point?
HCF
September 28th, 2009 at 4:18 pm
Completely off topic….
@Thor:
Noticed that you changed your pic… Before, you looked like Satan; now you look like Satan in a muscle tee. I don’t know why, but that kinda makes my day =)
HCF
September 28th, 2009 at 4:19 pm
and might i add bubba- not that i give a shit that you should know this-
the only trade ‘ol Harry said in real time- he lost
and anyone ’s who’s objective in coming onto this board is to tell us how to make money-
is a suspect bullshit artist
September 28th, 2009 at 4:21 pm
@Wanger: “Someday the consumer will get back to borrowing like they should?” That’s all I need to know about you right there. No, the consumer shouldn’t be burying themselves into more debt. That’s the exact opposite of what they “should” be doing at this point.
@bubba: Yeah, he’s been right about the markets, but I don’t care about the markets that much. I’m not a trader. I care about “THE BIG PICTURE”. Remember that?
September 28th, 2009 at 4:23 pm
HCF – Thanks!
It’s the widows peak. I’ll try to be more original with my next pic. I’ve been trying to copy Ahab’s but I can’t seem to get that facial expression down.
September 28th, 2009 at 4:23 pm
Are there two “HarryWangers” now? One post above says “Harry Wagner”. The other is from “HarryWanger”. Something smells rotten to me. Otto or Borchers? Come clean now.
September 28th, 2009 at 4:24 pm
You also spelled “distract” (“destract”) incorrectly. I think we have a bunch of Wanger imposters here at TBP.
September 28th, 2009 at 4:26 pm
@Thor:
Personally, I think Bluto was legit… Popeye was clearly on performance enhancing drugs! Kind of like Barry Bonds, Sammy Sosa, or our friend Harry Wanger…
HCF
September 28th, 2009 at 4:27 pm
If nothing else, this blog is usually void of immaturity. Well, not anymore. I always love on any forum when someone comes along with the fake/imitation i.d. So much for mature discussions.
September 28th, 2009 at 4:27 pm
LB was long over the weekend, made money but doesn’t feel the need to parade the trade like the WANGster.
September 28th, 2009 at 4:30 pm
@leftback: BINGO. And that’s why we here at TBP get irritated with Wanker. It’s all too reminiscent of the bull & real-tards incessantly telling us just how smart they were in ‘06 and ‘07 before the bottom fell out of the thing and the scittered away like a bunch of dirty cockroaches. Well, it appears some of them are back out from under the fridge.
September 28th, 2009 at 4:34 pm
Manny – “Are there two “HarryWangers” now? ” Bingo, I thought that post had too many HW buzz words in it to be the genuine article.
September 28th, 2009 at 4:35 pm
ahab: I continually give you real time trades. Told you when I was adding to my long efts. Also, on the day I bought RIMM AH I also told you I was adding more AAPL. So actually, you are quite wrong. And, I admit when I’m wrong and that one RIMM trade was wrong and I got stopped out. Other than that, I’ve been completely forthcoming with my calls.
September 28th, 2009 at 4:35 pm
Wanger – ignore the immature. You contribution is appreciated.
September 28th, 2009 at 4:37 pm
manny-
don’t you know – Wagner is one of the many faces of a certain poster we know- the “11 faces of eve” got nothing on him-
think April 20
September 28th, 2009 at 4:37 pm
leftback, Mannwich: I’m not parading the trade. I’m giving my insight to market moves. I actually receive a lot of email from people who thank me for the trading ideas. If other people choose to use my calls to make money that’s a good thing, right?
September 28th, 2009 at 4:38 pm
aw com’on guys. “hwagner” is obviously a counterfeit — read the post again, he’s actually mocking “hwanger”. methinks it’s cvienne and his many aliases (f420d being one of them).
September 28th, 2009 at 4:40 pm
@bubba: I figured that out after the fact. Read it too quickly but it sure sounded a lot like him. My apologies to the real “Wanger”.
September 28th, 2009 at 4:43 pm
Pardon me, but the easy choice of aping your competitors ruinous policies is hardly CEO leadership.
Examples of this kind of ‘leadership’ are few and far between.
Corporate America rewards short-termism, aggression, blame-shifting and herd-following. Arrogant stupidity rules the roost.
September 28th, 2009 at 4:43 pm
bubba-
ding . .ding . .ding . .ding..
Bubba wins the chicken dinner
September 28th, 2009 at 4:45 pm
@MikeG: Excellent point. So true. People respond to the right (or wrong) incentives (positive or negative). That’s the bottom line. It’s a mass race for the riches now in our culture. How you get there doesn’t matter anymore. Just that you got there.
September 28th, 2009 at 4:47 pm
@ahab
can i trade that in for a ribeye? i hate chicken.
September 28th, 2009 at 4:50 pm
@Mannwich:
> It’s a mass race for the riches now in our culture. How you get there doesn’t matter anymore. Just that you got there.
As Jay-Z so eloquently stated the priorities in life:
Money, cash hoes…
HCF
September 28th, 2009 at 5:00 pm
Consumer Confidence:
Consumer confidence follows, it doesn’t lead so I don’t think it has much predictive value.
The all-time high for consumer confidence occurred in October 1968, with a reading of 142.3. The Dow topped two months later and lost 36% over the next 18 months. Conversely, in February of this year, consumer confidence hit an all-time low — and the DJIA bottomed days later. In April of this year, after the stock market rally had already started, the Conference Board consumer confidence Index leaped 45% to 39.2, the second biggest jump on record. The biggest-ever increase came in April 1974, when three-quarters of the damage from the 1972-1974 bear market was still to come.
As for the dollar and the indicies, well, it’s not a perfect +1/-1 correlation there so I wouldn’t go getting all green shootsy over today.
Just in case anyone is looking for some alternative thoughts outside the Wangman’s….
September 28th, 2009 at 5:13 pm
good observations b22
September 28th, 2009 at 5:17 pm
ben22: I agree with you on Consumer Confidence, it follows the market. People are happy when the market goes up and they see their 401(k)s regaining value. That’s why I think it’s easy for the market to move up on the number. Self fulfilling prophecy. I don’t think we’ll see any numbers this week that are a surprise on the negative side. Hence, the indices should continue their upward momentum.
September 28th, 2009 at 5:26 pm
“I don’t think we’ll see any numbers this week that are a surprise on the negative side”
Noted
September 28th, 2009 at 5:29 pm
Ahab, I am a little surprised with you thinking I could be a cv spin off.
Bubba, you can believe what you want, I know I am a real person, the voices in my head tell me so.
I have no clue who cvienne (really) is but I personally find it quite humorous that you are thinking him responsible for so many different names, especially this one, the others I have no clue about, but I doubt it is as many as you want to believe. I hope he smiles when he reads all that he is supposed to be doing.
Harry, you post an article asking people to read it then, when they do and post something counter to how you see things and it becomes irrelative. Nice to see you are here trying to pass your agenda and not here for dialogue and communication. I come here to learn and the only thing I have learned from you is that – You are an attention whore and buffoon, but hey when you have those qualities why would you need anything else.
Harry – just how is it you “actually receive a lot of email from people who thank me for the trading ideas” Are these people from this blog? And if you have your own finacial company why are you giving out free adivice here…….. Hey you aren’t really Eric Tyson are you?
September 28th, 2009 at 5:32 pm
@ben22 – FYI Eliot Wave Theory arrived this weekend spent Satuday night with a couple beers and the book, the beers won out, read it last night without the beers, very interesting and will get a lot of good use out of it. Thanks
September 28th, 2009 at 5:36 pm
franklin: I didn’t really see how you refuted the article – that’s all. Like I said, the article addressed the consumer shifting segments (you seemed to agree to that).
People from this blog and MW.
September 28th, 2009 at 5:45 pm
Not sure what NW is.
This blog????
Just how do they get your email address?
September 28th, 2009 at 5:49 pm
Interesting article on WFB and it’s merger with Wachovia.
http://www.economist.com/businessfinance/displayStory.cfm?story_id=14513894&source=hptextfeature
September 28th, 2009 at 6:00 pm
420d-
well one of those voice have to be right
and-
i don’t know- i’m starting to get a little creeped out-
voices in your head and Winston Munn listening to what the dog tells him-
gives me the willies (whatever that is)
September 28th, 2009 at 6:02 pm
@f420d/cvienne/hanrrywagner
i used to think that split personality disorder was wholly fictitious and made up by overly imaginative psychologists — you’ve made me reconsider this.
September 28th, 2009 at 6:04 pm
LB @2:19
I took notice of these events today as well. Things are getting strangely curious.
@ Wanger/Wagner/Bully
Whichever you are, regardless, a comment was made about consumer borrowing to get a mini-boom going – this is the point – there is no credit. As much money can be printed as possible but if banks don’t lend and consumers don’t borrow – who gives a shit? I recommend you google “prechter jaguar inflation”.
Also today was the first day we’ve seen some real forward looking predictions from HW. I’m watching 10,200-10,400 and 1100. Not much of a stretch of a prediction but at least you put something down for time to tell.
September 28th, 2009 at 6:28 pm
@ ahab – the trouble is more then one voice is correct…. I wonder if winston munn will patch me through to his nieghbors dog.
Hey on a serious not – HarryWagner is claiming people from this blog have been emailing him “thank yous”
You haven’t been sending him thank yous have you?
@Bubba – I guess cvienne has way too much free time on his hands…..But hey believe what you want
September 28th, 2009 at 6:37 pm
mcHappy: i’ve actually been saying DOW 11,500+ area before a real pull back of 8-12% for some time on these boards.
And FWIW, HarryWanger is no one other than myself. Period.
September 28th, 2009 at 6:41 pm
Barry says:
“Many children have been admonished as a kid, “If all your friends jumped off the Brooklyn Bridge, would you?”
Actually, only the kids in New York were told that. Your (NYC) tendency to assume that your experience is universal, is showing.
September 28th, 2009 at 6:50 pm
And when the stellar economic news comes in later this week we could be seeing 1150+ in our rearview mirrors. I can not wait to see these numbers and watch all the mini-booms advance our economic growth for years to come.
September 28th, 2009 at 7:13 pm
Hah – that’s just wrong
September 28th, 2009 at 7:24 pm
Thor: It is not wrong, you will see the economic data is getting better every day, you doom and gloomers choose to sit there and ignore the vital changes taking place. Don’ say I did not warn you.
September 28th, 2009 at 8:10 pm
I don’t see how any of the CEOs ot those working at the banks can necessarily be called irrational. They get paid asymmetrically for the risk they run and from a selfish view it makes perfect sense. Were they irresponsible and self-centred? Most likely but I do not think you can call them irrational.
September 28th, 2009 at 8:23 pm
Who is this Harry Wagner, and how come he’s taken over Barry’s blog?
And how many of them are there? (one user name has a blank between the first and last names, one doesn’t). Maybe HE’S CNBC Sucks (who by the way wanted me to tell you all to go follow his tweets)!
Is it this guy at Allen & Co.? — hwagner@allenco.com
Anything to do with this?
http://www.urbandictionary.com/define.php?term=Harry%20wanger
And finally, why is everybody worked up about his posts?
September 28th, 2009 at 8:51 pm
bergsten-
hmmm . . .
September 28th, 2009 at 10:37 pm
[...] Ritholtz responds to John Cassidy’s Rational Irrationality [...]
September 29th, 2009 at 2:07 pm
You seem to assume that what is good for the officers of banks is
good for the banks themselves and vice versa. Now that’s irrational.
September 30th, 2009 at 7:56 pm
[...] Can Irrationality Be Rational? (ritholtz.com) [...]
September 30th, 2009 at 10:42 pm
Millennia ago, Aristotle observed that rational agents act for an end that they regard as a good. He then distinguished between real and apparent goods. The difference between someone who is wise and someone who is not is the ability make this judgment correctly. For example, reason is often colored by passion or venality, information may be lacking, or a person may lack sufficient intelligence in complex situations. Thus, people can be rational and still be wrong.