Just as shamans have been consulted throughout time to provide the desperate and gullible with prophecies, so too are financial shamans (often masquerading as experts) are looked to for comforting myths about market direction.
Of course, we can and should prepare for the many possible market eventualities by looking at the data and trading trends, but to expect anyone to be able to provide absolute predictions for the future is absurd. The truth is that we do not know for sure, and anyone that tells you they do know might as well be gazing into a crystal ball.
Today’s episode looks at the various attitudes and beliefs concerning the falsehood of market predictability. Michael Covel runs the commentary, drawing a narrative thread through various excerpts from some of the most prominent economic and financial thinkers.
In this episode of Trend Following Radio:
- Recognizing when you are being misled by the experts
- What to look for in trend analysis and what to be wary of
- Considering bubbles and other unpredictable global factors in the markets
- Finding an objective approach to investing based on quantifiable information
- Considering timeless human investment psychology elements
- Making investment decisions without being blinded by rigid economic processes or political ideologies
“It’s mind numbing to study financial history, because it is so repetitive: we do the exact same things over and over. We have followed this pattern in every major bubble, starting with the coin mania in the Roman empire.” – John Galbraith
Mentions & Resources:
- Doug Litowitz’ blog post about CNBC
- Charlie Munger
- Seth Godin’s blog post about predictions
- John Galbraith, Canadian-American economist
- “Zero to One”, a book by Peter Thiel
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