Posts filed under “Philosophy”
“We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.” -Ned Davis
I began my career in finance on a trading desk. You learn some things very early on in that sort of situation. One of the most important things is that while it’s OK to be wrong, it can be fatal to stay wrong.
Unfortunately, that standard doesn’t apply to people whose work isn’t evaluated on a daily and objective basis via their profit and loss results. In many fields, such as politics and policy-making, there are lots of shades of gray when it comes to being right or wrong.
And quite bluntly, that is a shame. As a society and a nation, we would all be better off if the people who are consistently wrong paid some sort of price for those errors. Unfortunately, that doesn’t happen enough these days.
Some bad policy decisions will lead to the occasional elected official being turned out of office. That — unfortunately — is the exception, not the rule. I doubt history will rank George W. Bush and Barack Obama among our great presidents , but both were re-elected despite being unpopular. Between gerrymandered congressional districts and apathetic voters, even the most incompetent elected official has almost lifetime tenure.
What underlies all of this nonrecourse bad policy? It is much more than corporate lobbying and partisan politics. The worst of today’s political malfeasance is being driven by failed ideologies. Zombie ideas that refuse to die have become enshrined in our collective intellectual legacy. The people behind these have been insulated from the economic costs they impose.
Blame the billionaires.
I stumbled on this gem earlier today: “Earlier this year, the Dow had dropped over 5,000 points in 6 months. One of the collective fallacies our culture operates under is the delusion that the market is some kind of astute forecasting machine. It is not — it represents the collective wisdom of 10 million panicked…Read More
Cassandra Does Tokyo is a former hedge fund manager and ex NY Trader, who is now living abroad. This was originally published on September 23, 2014 ~~~ When people prattle-on about tax, it is mostly made from ground-level, with a focus on tax rates. When my most rabid libertarian friends weigh in on the subject,…Read More
I have a fairly long piece coming out looking at CAPE, but for those of you interested, here are the research and resources I used: Fixing the Shiller CAPE: Accounting, Dividends, and the Permanently High Plateau PHILOSOPHICAL ECONOMICS December 13, 2013 @Jesse_Livermore An Old Friend: The Stock Market’s Shiller P/E, Clifford S. Asness, Ph.D., AQR’s…Read More
This week’s Masters in Business Radio show is on at 10:00 am and 6:00 pm on Bloomberg Radio 1130AM and Siriux XM 119. Our guest is famed short seller and hedge fund manager Jim Chanos. You can listen to live here. All of the past Podcasts are here and at Soundcloud and coming soon to…Read More
“By setting oneself totally free of constraints, free of thoughts, free of this debilitating activity called work, free of efforts, elements hidden in the texture of reality start staring at you; then mysteries that you never thought existed emerge in front of your eyes.” ~ Nassim Nicholas Taleb Readers of this blog are likely aware…Read More
From Don Boudreaux’s Everyday Economics: Hat tip Marginal Revolution What can a small, isolated island economy teach the rest of the world about the nature and causes of the wealth of nations? When Tasmania was cut off from mainland Australia, it experienced the miracle of growth in reverse, as the reduction in trade and human cooperation…Read More
If you work in finance, you will invariably come across an example of single-variable analysis. Almost daily, we see terrible examples of this sort of analytic error, rife with logical weakness, yet offered with the highest degree of certainty. The way this works is as follows: Some ominous data point will be shown, along with…Read More