Apr

19

 A note that "one of the first investors in the world to be bearish on mortgage back" has come across the horn. I have seen many such statements made about someone who was right the previous time. Often, as Harry Browne points out, when you read their things, it is not quite as clear cut as that as they make many statements and often their positions are different if they trade or not. But, But, But. Here's the rub. Why should the fact that someone was right or prescient at some time have anything to do with ones prescience in the future. I would posit an opposite relation.

Studies of the persistence of mutual fund performance support this. A person is not good for all seasons. My former good friend, the fencer was very bearish throughout the 2000s. He saw a 50% chance of a terrible debacle at all times. It happened in 2008. He made money. What does that mean for the future? He still sees a 50% chance of total ruination and like 99% of the bears he missed the bull market but is very happy he's only down 10% or so because he was positioned for the big one.

The same is true for the worst naivete that comes out of the route 125 boys. They noted that 1929 the months were similar to 1987. So they became very bearish and the drunken grain thresher knew that on Oct 19, it had to be a crash like Black Friday in 1929.

Such reasoning. Have conditions changed? Is there any relation between what happened 50 years ago and today. Do things repeat in a predictive way or reverse as they go the way of least effort.

Such considerations enable one to reduce the vig and grind at least by not being influenced. Hopefully those on this list will not add overly to the vig or grind. That would be a blow to the muse of not succumbing to the evil houses and their NGO consultants et al.

Steve Ellison writes:

I once worked with people whose jobs were to forecast sales. One posted a humorous list of rules for forecasters. The #1 rule was: If by some chance you are ever right, never let anyone forget it.


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