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snousle...but remember when I said that if you really believed a recession was coming, you could triple your money by investing on the Intrade prediction market?
Well, you could have - the contract value is now 93. With even better timing you could have achieved more than 10x return in three months. Although recessions are only known in retrospect, economists are now nearly unanimous that one has arrived. Not bad for the one and only bit of investment advice I gave all year. I didn't think we'd actually see a recession in '08, considering the fairly restrictive definition of the term, so I didn't bet on it myself. But many of you did forsee it, and you were right, so I get to be wrong while saying "I told you so" at the same time. ;-)
I was also wrong in my belief about a year ago that the mortgage industry couldn't possibly be as bad as people were saying because nobody in their right mind would trade in mortgage-backed securities if the market were really as tottery as the pessimists said it was. I believed that the market really did summarize the best available knowledge of the value of these instruments. Well, one must now conclude that the people making all those billion-dollar trades were not, in fact, in their right minds. My boss back at Perlegen once told me that the more money you have involved in a deal, the sloppier the accounting will be. Guess he was right!
Spanked by the invisible hand. Amazing. Some day there will be a theory that accounts for all of this, and it will be beautiful and fascinating. In the meanwhile, it appears that classical economics has been overturned by mass insanity.
Well, you could have - the contract value is now 93. With even better timing you could have achieved more than 10x return in three months. Although recessions are only known in retrospect, economists are now nearly unanimous that one has arrived. Not bad for the one and only bit of investment advice I gave all year. I didn't think we'd actually see a recession in '08, considering the fairly restrictive definition of the term, so I didn't bet on it myself. But many of you did forsee it, and you were right, so I get to be wrong while saying "I told you so" at the same time. ;-)
I was also wrong in my belief about a year ago that the mortgage industry couldn't possibly be as bad as people were saying because nobody in their right mind would trade in mortgage-backed securities if the market were really as tottery as the pessimists said it was. I believed that the market really did summarize the best available knowledge of the value of these instruments. Well, one must now conclude that the people making all those billion-dollar trades were not, in fact, in their right minds. My boss back at Perlegen once told me that the more money you have involved in a deal, the sloppier the accounting will be. Guess he was right!
Spanked by the invisible hand. Amazing. Some day there will be a theory that accounts for all of this, and it will be beautiful and fascinating. In the meanwhile, it appears that classical economics has been overturned by mass insanity.
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no subject
Date: 2008-11-18 07:18 pm (UTC)Oh yes, I remember it very well. I also remember saying at the time that I only had $3.00 to my name, so there was no way I could make any investment based on your "recommendation." </snark>
Well, one must now conclude that the people making all those billion-dollar trades were not, in fact, in their right minds.
Well DUH!
From my common-sense perspective, it seems obvious that all these fancy-schmancy economic theories ignore some basic facts about human behaviour: Namely, GREED IS NOT RATIONAL!
OK, stepping off my soapbox, now.
no subject
Date: 2008-11-18 11:51 pm (UTC)It is instinctive. Which is why pyramid schemes are illegal, to help force rational behavior upon irrational populations. <soapbox> Which is why all exponential growth functions should be illegal, including the ones that now form the foundation of our economy. </soapbox>
GREED IS NOT RATIONAL!
Date: 2008-11-19 07:39 am (UTC)Chuck