Don’t Fight the Last War

Caught this excerpt on pragcap.com:

“In the science of physics, we know that water freezes at 32 degrees. We can predict with immense accuracy exactly how far a rocket ship will travel filled with 500 gallons of fuel. There is preciseness because there are constants, which do not change and upon which equations can be constructed.”
–Robert Wenzel, Editor of the Economic Policy Journal, speaking at the New York Fed

Continuing:

In the science of economics there are no such constants, yet investors often behave as if they operate in a world of logic and certainty. Because such assumptions are made, history is littered with investors who have failed miserably.

Rotate on those comments for a moment. Let them sink deep into your gut.

One thought on “Don’t Fight the Last War

  1. one reason why EMH and MPT don’t work…market participants are not rational for the most part, which is one of many reasons why markets are not efficient…EMH guys are all usually broke

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