Mq, all I can say is....finally!
No one but no one can predict markets.
Oh, sure, we can put on our macroeconomic hats on, get the drift close to right, and arrive at a decent approximation until, of course, something untoward happens that sets our sooths on their head.
It happens all the time.
The best we can do is keep guessing in the right direction. The more specific we get, the more likely it is that we are wrong.
I absolutely love the book by Kahneman that deals with fat and slow thinking. It makes these points and explains them brilliantly. Most of us are deluded gamblers, with the lucky ones being considered geniuses, e.g., Munger and Buffett, though they are probably mere statistical anomalies. Jim Grant of Interest Rate Observer fame is a great example. He is uncanny in predicting big macro trends, just brilliant. Never, ever follow any of his stock recommendations, however.
amazon.com
We are range-bound by statistics, bell curves, you name it. We continue to believe in things for which there is no basis.
I particularly am impressed by Kahneman's analysis of the hugely bright, clearly superior woman, a real 1%er in the talent and looks department who married someone 'beneath her'. The poor slob is an object of derision, her judgment is questioned, gossip flows.....but in point of fact the statistics made it practically impossible for her to marry 'up' and just about anyone she could marry is likely 'beneath' her. Simple statistics, not personality flaws, lack of judgment, etc. are at play.
This kind of analysis can be applied to any number of situations, including sooth-saying, stock market success, etc.
It is dreadfully difficult to be consistently correct.
I combat this by setting my sails very generally, looking to make my profits by identifying (hopefully!) and following macro trends rather than having specific ideas.
I hate to tell you this, but our investment in QCOM could have as easily been a bust than a winner. Things lined up just so, and we lucked out. A more rational investor would have predicted the success of wireless generally and invested in a lager number of telecom stocks and probably assured himself of a decent but much more safe return. Your fascination with gstar is a great example of the other side of the coin. |
