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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Chen who wrote (99212)	1/7/2008 11:50:43 AM
From: ChanceIs	Respond to of 306849

Taleb of Black Swan fame makes a great deal about history. I need to go back and reread his book - I thought it difficult to comprehend. I think Taleb thinks that history is very important. One point which came through loud and clear was that history tends to be written ten years after the fact, and almost necessarily reflects bias and interpretation. One of his favorite books was Shier's Berlin Diary because it was a running tally of the events in 1930s Nazi Germany W/O any attempt to show cause and effect. He also describes survivor bias, under which historians (and retail financial advisors) draw conclusions from an incomplete set of data. For example - hedge funds average a 25% gain. That might be true of the surviving hedge funds. However about 40% of hedge funds go bust in the first few years. On average hedge funds may offer no return. Your point is that Americans don't learn history. What was the joke a couple months ago...Miss South Carolina didn't know where Africa was?? I agree that Americans don't learn history. I will go one step further and suggest - via Taleb - that you have to be really, really cagy to study history and draw the correct conclusions. Another example...Nixon's price controls were a disaster. Yet today we have the government meddling in he mortgage industry and talking (if not enacting) bans on prepayment penalties, the judiciary deciding mortgage write-downs in BK, ex post facto freezes on ARM escalations. Everybody here knows that that will only accelerate the house price decline, but still we march towards self destruction. One lesson which is very hard to draw from history and accept as Gospel is that Americans still want the free lunch and believe in Goldilocks. That little bit of information can be enormously profitable under the right circumstances...like being short in housing today.