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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (43423)	12/4/2008 12:46:12 AM
From: TobagoJack	Read Replies (2) \| Respond to of 217661

from today's richard russell, and imo, most folks are selecting "TRAGEDY" outcome; and for the folks without gold, they are implicitly saying "this time it's and will be different" December 3, 2008 -- Pascal and investing -- We both went to the same high school, Horace Mann School for Boys in Riverdale, NY. The great Peter Bernstein graduated from Horace Mann in 1938, I graduated in 1942. Peter wrote the book on risk -- the Book is entitled "Against the Gods, the Remarkable story of Risk (John Wiley & Sons). I want to talk about risk, which plays no small part in investing. In order to understand risk, it is necessary to talk about consequences. And this leads to Pascal's theorem. Writes Peter Bernstein in his book -- "Sometimes we make decisions on the basis of past experience, out of experiments, we or others have conducted in the course of our lifetime. First we cannot conduct experiments that will prove either the existence or the absence of God. Our only alternative is to explore the future consequences of believing in God or rejecting God. Nor can we avert the issue. For by the mere act of living, we are forced to play this game. Pascal explained that belief in God is not a decision. You cannot awaken one morning and declare, "Today I think I will decide to believe in God." You believe or you do not believe. The decision, therefore, is whether to choose to act in a manner that will lead to believing in God, like living with pious people and following a life of holy water and sacraments." The person who follows these precepts is wagering that God is. The person who cannot be bothered with that kind of thing is wagering that God is not. The only way to choose between a bet that God exists and a bet that there is no God down the infinite distance of Pascal's coin-tossing game is to decide whether an outcome in which God exists is preferable -- more valuable in some sense -- than an outcome in which God does not exist, even though the probability may be 50-50. This insight conducts Pascal down the path on a decision -- a choice in which the outcome and the likelihood that it may occur will differ because the consequences of the two outcomes are different. If God is not, whether you lead your life piously or sinfully, is immaterial. But suppose God is. Then if you bet against the existence of Gold by refusing to live a life of piety and sacrament, you run the risk of eternal damnation, the winner of the bet that God exists has the possibility of salvation. As salvation is clearly preferable to eternal damnation, the correct decision is to act on the basis that God is. "Which way should we incline?" The answer was obvious to Pascal. Decisions -- OK, what has Pascal's theorem got to do with today's stock market? First, we are in a vicious primary bear market. No one on this earth knows how far down the Dow and the rest of the market might carry. The Dow could halt its descent at 7500 or above or it could sink to a level where the dividend yield on the Dow rises to 6% (this would entail the Dow crashing into the 5000s). We can sit with our stocks, our full current portfolio and hope that the Dow and the stock market halts it's decline at 7500 or above. If we sell out all our stock here, and Dow 7500 turns out to be the final bottom, we will have done the "smart" thing or let's say we were lucky. But if we sit tight and the Dow goes to 5200, we must consider the CONSEQUENCES. We will have agonized as our portfolio is shattered and we will have sustained tragic losses. So let's go back to Pascal --what are the consequences of our guessing wrong in this situation? We don't know the answer to the question -- "sit or flee?" The only thing we do know is the consequences of our making the wrong decision. We must always ask this crucial question prior to making an investment decision. WHAT ARE THE CONSEQUENCES IF I AM WRONG.

To: energyplay who wrote (43423)	12/4/2008 9:29:15 PM
From: Tommaso	Read Replies (2) \| Respond to of 217661

I have this totally unorthodox view that a lot of this "crisis" is just manufactured by Chicken Hawk / Chicken Little GWB, who has listened to Bernanke and Paulson the way he listened to the "Weapons of Mass Destruction" intelligence and has set the whole thing off by stampeding Congress (and the Fed) into every sort of ill-advised accommodation.