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James Montier follows up with "Financial Heresy," Part II in his take on interest rate idolatry. Included is a response to James' thoughts from Ben Inker, "Potential Utility in an Equity Risk Premium Framework."

Related book: Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future [I also started the audiobook this weekend, and the narration is great so far.]

“You need to know very little to find the underlying signature of a complex phenomenon…. This is the gift of training and expertise – the ability to extract an enormous amount of meaningful information from the very thinnest slice of experience.” 

Malcolm Gladwell, Blink 

The ability to make accurate decisions in the face of overwhelming amounts of information can require a great deal of experience, but what does that experience actually do? My impression is that experience – studied and absorbed carefully – nurtures the ability to see and identify subtle elements in the landscape, and eventually to recognize patterns. Accurate decision-making doesn’t rely on weighing and deliberating over every detail of that landscape. As Malcolm Gladwell brilliantly writes in Blink, accurate decisions often rely on “thin-slicing” – a kind of pattern recognition that perceives and filters out the very few factors that actually matter. 

That’s not to suggest that simplicity, in and of itself, is the objective. Ockham’s Razor doesn’t merely say that the simplest explanation is usually the best; it requires that the explanation must also be consistent with the evidence. Likewise, Einstein joined his advice that “A theory should be made as simple as possible,” with the essential condition “but not so simple that it does not conform to reality.”