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« Weighing the Week Ahead: Will Q1 Earnings Disappoint? | Main | The American Voter: Often wrong but never in doubt! »

April 17, 2012



Pacioli -- OK, I get it. You are questioning a general conclusion that seems obvious to me and you want some kind of analysis of pundits -- something that would be nice to have, but you and I cannot do.

If you sat with me in my office, I could persuade you. I would stop the TIVO and tell you what some guy was about to say, because I know his story -- he is selling fear, bonds, a political candidate, gold, or something similar. Or he is just entertainment.

He is not rewarded for providing sound investment advice.

It would be great if the media provided track records on failed predictions. Meanwhile, neither of us can produce data for some amorphous group of pundits, many of who do not even directly manage investments.

As I frequent reader you know that I do not manage a single fund, but a number of different programs. I cannot advertise results online, but I am happy to provide information and discuss with interested investors. Each person gets a customized program.

I'll try to sharpen up this point in the book version, but I cannot do more here. If anyone chooses to believe that these guys get on and spend their five minutes talking about, for example, the imminent collapse of Europe, and then they are secretly going long the US market, well then they are not using their allotted time very effectively.

One of my main themes is to focus on data, not stories. Those who understand this, and the wall of worry concept, are well on the way to improving their results.


real asset investing

Personally, I happen to believe that future inflation is the problem. Here in the UK, we've had inflation of 3pc or above for 28 months straight. I blame the BOE's QE for this. For now, most of the QE “proceeds” are sitting on the balance sheets of banks, but at some point it will hit the real economy. I guess stocks will hold up better than bonds in that scenario, but in this non-expert opinion, it still seems like a legitimate concern.


Indeed, following the links does show that many pundits have enumerated the worries that characterize the investment landscape. I have no dispute with this (and I had already seen most of your links - I am a frequent reader).

The point of my comment was that in your post you make the assertion that "Those of us who have been data-driven have beaten the anecdotal crew by a wide margin."

But nowhere in your post do you demonstrate that these pundits, despite being less data-driven, have actually accumulated inferior investment records relative to your own. In fact, you do not even provide any reference point as to your own record. And so the claim itself seems wrought with the same vagueness for which you decry the 'pundits' in your post.

Again - "Anyone can deal in words and anecdotes. It requires some expertise to include data."

I guess I'm raising the possibility that just because some of these folks do not have time to thoroughly describe their methodologies and strategies within the 5 minutes of air time allotted, does necessarily mean that the actual investment strategies they are implementing are devoid of data. And again, if they are devoid of data, you are not supporting the notion that their actual results achieved are in any way inferior.

Simeon Beer

Earning are yesterdays news.You are gambling that the growth will continue. As justin Mamis says in his book on risk,the higher the advance the greater the risk as great expectations are built into the higher price


Pacioli -- I have read your comment three times and I still don't understand it.

The basic idea is that stocks are driven by earnings growth, which has been excellent for several years. Those who understand this concept and use it have done pretty well, no matter what they have bought.

The parade of pundits on TV and in print that glide from topic to topic, always telling you what to worry about, have helped to create the Wall of Worry -- more reasons to be afraid.

To prove this, follow the links I gave in the post and compare with a stock chart:)

I hope this gets at your question.



"Those of us who have been data-driven have beaten the anecdotal crew by a wide margin."

Have you really? Where is the data?

"Anyone can deal in words and anecdotes. It requires some expertise to include data."

I am not raising substantial doubt as to your claim; simply requiring the verification via data prior to acknowledging the claim.


I hadn't thought about it but the arguement relating to profit margins is a very interesting breakdown of a misconception that even I held.

Obviously companies aren't simply going to cut their prices or suddenly pay more for their inputs OTBE but what is curious is how we got there in the first place.

I was thinking about the law of diminishing returns with regards to production, ie the first x amount of goods is the easiest to produce and once you expand the business and incur extra costs, your marginal profit decreases. Maybe the total quantity has reduced so much that most companies have been able to streamline operations to make them the most efficient.

Thanks for the thoughts!!

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