Money and Finance
- Tren Griffin On Mental Models And Investing...
From Charlie Munger: The Complete Investor (which according to Amazon, is now being shipped for end-of-week deliveries): No one can know everything, but you can work to understand the big important models in each discipline at a basic level so they...
- John Mauldin: Uncertainty And Risk In The Suicide Pool
For the past 80 years, we have created ever more sophisticated models of risk in the economic and investment worlds. With each new tool we create to measure risk, we seem to think we have somehow gained more control over our future. Paradoxically, we...
- Nassim Taleb: Throw Out The Probability Models
Found via Farnam Street. After the events that started in 2007 and the subsequent reactions by economists, anyone who takes the current economics establishment seriously needs to spend time in a sanatorium. This does not mean we should write off the entire...
- John Kay: A Wise Man Knows One Thing – The Limits Of His Knowledge
John Maynard Keynes, who never tried to conceal that he knew more than most people, also knew the limits to his knowledge. He wrote “about these matters – the prospect of a European war, the price of copper 20 years hence – there is no scientific...
- Hussman Weekly Market Comment: Recession, Restructuring, And The Ring Fence
In recent months, our recession models have forcefully shifted to warning of oncoming recession. Our initial concern in August was based on a fairly compact set of indicators that we track as a Recession Warning Composite (see Recession Warning, and The...
Money and Finance
John Mauldin: The Quest for Certainty
The last two weeks we have been looking at the problems with models. First we touched on what I called the Economic Singularity. In physics a singularity is where the mathematical models no longer work. For example, models based on the physics of relativity no longer work if one gets too close to a black hole. If we think of too much debt as a black hole of sorts, we may understand why economic models no longer work. Last week, in “The Perils of Fiscal Cliff,” we looked at the use of fiscal multipliers by economists in order to argue for or against governmental economic policies. Do you argue for austerity, or against it? There is a model that will support your case, most likely using the same data that your adversary uses.
These letters have generated a great deal of positive response and conversation. While I very rarely suggest to readers to go back and read previous letters, but reading these may help you appreciate why it is so difficult to understand what is happening in the global economy today.
This week, in a somewhat shorter letter, we once again consider the vagaries of measurements and models. Growth of the US economy, we are told, was 2% last quarter. That number will of course be revised, but what is it we are measuring? Should we attach any importance to the measurement at all? The short answer to the last question is yes, but it is important to understand that there is no certainty in that number. Or at least not any certainty according to the generally accepted meaning of that word.
- Tren Griffin On Mental Models And Investing...
From Charlie Munger: The Complete Investor (which according to Amazon, is now being shipped for end-of-week deliveries): No one can know everything, but you can work to understand the big important models in each discipline at a basic level so they...
- John Mauldin: Uncertainty And Risk In The Suicide Pool
For the past 80 years, we have created ever more sophisticated models of risk in the economic and investment worlds. With each new tool we create to measure risk, we seem to think we have somehow gained more control over our future. Paradoxically, we...
- Nassim Taleb: Throw Out The Probability Models
Found via Farnam Street. After the events that started in 2007 and the subsequent reactions by economists, anyone who takes the current economics establishment seriously needs to spend time in a sanatorium. This does not mean we should write off the entire...
- John Kay: A Wise Man Knows One Thing – The Limits Of His Knowledge
John Maynard Keynes, who never tried to conceal that he knew more than most people, also knew the limits to his knowledge. He wrote “about these matters – the prospect of a European war, the price of copper 20 years hence – there is no scientific...
- Hussman Weekly Market Comment: Recession, Restructuring, And The Ring Fence
In recent months, our recession models have forcefully shifted to warning of oncoming recession. Our initial concern in August was based on a fairly compact set of indicators that we track as a Recession Warning Composite (see Recession Warning, and The...