One of the very hardest things about investing is wrapping your head around the concept that you really do not know what is going to happen tomorrow.
Sure, we can lay out various possibilities, and say this has a 42% chance of occurring, that has a 26% chance, and that over there is 9% — but you do not know. That was the motivation behind the "Expect to be Wrong" column. Understanding this makes it that much easier to preserve capital, to cut and run when you need to. Its also the reason why I pepper my discussions with caveats (see this for an example).
Every time I see the classic pundit cockily opine about exactly what is going to happen, I am forced to shake my head in disbelief. The phrase that comes to mind is "often wrong, never in doubt."
Which is why this this commentary from Jeff Matthews is so refreshing:
"For the record, as readers have gleaned, I own shares of Google, because I think the earnings power of the business is much higher than Wall Street thinks. But I could very well be wrong and change my mind in a minute, and I don’t recommend anyone go near the stock."
I’ve done a show or two with Jeff (Kudlow & Company), and while I’ve never met the man, I am an admirer off his work. I am also a regular reader of his very entertaining blog, Jeff Matthews Is Not Making This Up (you should be too).
Investors should keep his phrase handy: But I could very well be wrong and change my mind . . .
So let me make sure I completely understand this: If we back out all of the inflationary data from the CPI, and PPI, there is, um, no inflation?
Thanks for clarifying that.
While the Dismal Set — and the majority of CNBC guests — continue to spout such foolish nonsense, its nice to see that at least the WSJ wasn’t bamboozeled. Their online headline read: Consumer Prices Climb 0.5%
"Gasoline prices shot up 8.3%, the biggest increase since February 2003.
Food prices, however, were unchanged for the first time in nine months.
Medical-care prices were unchanged after nearly 30 years of increases.
Housing prices grew more slowly in August, falling to a 0.2% rate from
0.4% in July. Automobile prices fell 0.5%, half the rate of decline
recorded in July."
You can see more from the dismal set below . . .
UPDATE I: September 16, 2005 10:54 am
Its the ultimate Hedonic adjustment: Chart of the Day shows us graphically that without the items that are going up in price, there is hardly any inflation at all!
UPDATE II: September 17, 2005 11:54 am
The first official chart from the weekend WSJ:
UPDATE III: September 24, 2005 2:54 pm
Here’s a round up of all our recent discussions on inflation
Consumer Prices Climb 0.5%
Katrina Helps Propel Jobless Claims
To Highest Level in Nearly 10 Years
WALL STREET JOURNAL, September 15, 2005 5:44 p.m.