- Probabilities Versus Clairvoyance: It’s frustrating to see exogenous random news mess up our reasoned position. In the long term, however, such exogenous random news events even out, balancing unpleasant surprises with pleasant ones. The problem is, while our brains may perceive the long term, our emotions live almost exclusively in the present moment. The most successful long term investors instruct their brains to tell their emotions to “shut up!“
- Paulson vs. Turov: On January 8, Treasury Secretary, Henry Paulson, said he did not expect housing prices to revert to their mean level after the sharp run-up in recent years. I think he is wrong. I think that not only will they revert to their mean but that they will go below their mean. I think it will take the better half of a decade for it to happen, but when bubbles break, historically they often revert past their mean, and I think this will be no exception.