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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (68225)	8/29/2005 3:02:14 AM
From: shades	Read Replies (1) \| Respond to of 74559

Tracing paper - HAHA - you kill me MOO. That was the best laugh I had tonight. RE seeking alpha - how much are we losing with greenspan retiring? nytimes.com But even as Mr. Greenspan was being celebrated as the economy's 'maestro,' he sounded far less omniscient behind closed doors. 'We really do not know how this system works,' he told members of the Fed's policy-making committee in Washington, according to transcripts released earlier this year. 'It's clearly new. The old models just are not working.' That is because Mr. Greenspan abhorred rules, was skeptical about economic models and jettisoned practices that were enshrined by the likes of Paul A. Volcker, his predecessor, and Milton Friedman, a winner of the Nobel in economic science. If Mr. Greenspan stood for anything, it was flexibility and the freedom from dogma. Mr. Greenspan's approach to such challenges was to roll with the punches, basing his management of the economy on a refusal to believe in firm rules, doctrines or models. 'A surprising problem is that a number of economists are not able to distinguish between the economic models we construct and the real world,' he remarked back in 1984, when he was still head of a private consulting firm. He jettisoned the practice of basing policy on growth in the money supply, a concept enshrined by Mr. Friedman as the best way to prevent inflation. Allen Sinai, chief global economist at Decision Economics, pointed to one reason Mr. Greenspan was so willing to rely on his gut instincts. 'He didn't go to one of the top schools: Harvard or M.I.T. or Stanford or Northwestern,' Mr. Sinai said. 'I think that was an advantage. He didn't get brainwashed into one of the doctrines.' Critics of Mr. Greenspan contend that he has relied too heavily on his own judgment and not enough on consistent principles. 'We've moved further away from a rules-based system,' said Brian S. Wesbury, chief investment strategist at Claymore Advisers. 'We have a Greenspan standard, but we don't have any kind of a Fed standard.' If the Fed had adopted an explicit numerical inflation target - something that many other central banks use but that Mr. Greenspan has rejected as too restrictive - Mr. Wesbury contended that the Fed might have avoided much of the volatility since 2000. With little inflation in sight, the Fed might have raised interest rates less than it did in 1999, which might have softened the downturn that followed. That in turn might have made the Fed less eager to drive down rates when the stock market fell sharply in 2000, causing less of a potential bubble in housing prices today. I am a rules type of guy MOO - mavericks are OK - but I need a system - I can't grow KFC on the backs of monkey labor unless I have a good repeatable scalable system - if it required Colonel Sanders to do well - it would have died after he ate that last heart clogging chicken leg. What are we to expect from the future Fed maverick? Not basing policy on growth in the money supply could turn out to be very bad eh? Cowboys are only good long term if you can replicate them. Colonel sanders copied his 13 special ingredients recipe and gave it to others - so it could live on after his death - what is greenspan leaving? amazon.com Swensen has been the chief investment officer of the Yale endowment for approximately two decades. Thanks to him, it is widely considered the best-run, most influential institutional fund in the nation, which would explain why every other institution is attempting to copy it. Over the past two decades, Yale has garnered over fifteen billion dollars in returns, and the manner in which Swensen and his colleagues have gone about generating those returns is the result of two things: an exceptionally diversified portfolio, consisting of 15% of its assets in domestic equities, 15% in private equity, 15% in foreign stocks, and 18% in timber and energy investments, and, most significantly, "hedge funds," (in which Yale has invested 26% since the conclusion of fiscal year 2004) which, at first, were used exclusively by wealthy investors until Swensen discovered that the managers of such funds were extremely skilled. Ironically, 'Unconventional Success: A Fundamental Approach to Personal Investment,' was intended to be a book on showing how individual investors can invest in the same manner as Yale, but in the end, it ultimately achieves the opposite effect: it shows why individual investors would never be able to invest in such a manner, while allowing Swensen to appreciate the blockbuster advantages that accompany the career as an institutional money manager. One other central purpose of this book is to teach individual investors that they should not try to pick stocks themselves, due to stiff competition in the markets.