To: Cogito Ergo Sum who wrote (157007 ) 4/24/2020 4:36:39 PM From: sense Read Replies (1) | Respond to The past counts.. it's value however declines with time passed.. I think that's an error... and not a small one. It is a truism that what matters now is what matters now... and that is going to be different than what mattered yesterday. It is essentially always true that "its different this time"... still leaving an open question about BOTH "how different is it, really" and "how much does that difference really matter" ? Most large errors in practice, I think, come packaged in the banality of the minor error in assumption that things are SO different this time that the rules that governed reality in the past... no longer apply. Things are different this time... therefore gravity can't be expected to work any more. I can put that in the concrete terms I address here in relation to my own choices in trading. I was long DTO... which is a 2X short crude oil ETN. To get there, I sold what I did have in SCO, for a particular reason. The trading patterns in SCO frustrated me, because it is the largest and most widely held short crude vehicle... which also means it is the most manipulated. Sold SCO and bought DTO... because its trading volume was smaller... which meant its performance was a lot more accurate in tracking the changes occurring in the oil price. There's also a risk, of course, in the relative lack of liquidity... so, now... I'm out of the oil trade, for now... and wouldn't choose DTO right now in any case... because for now the lack of liquidity, with the volume in the trade collapsing... is far more of a risk than it was when volumes were increasing... So, things are different, now in my choices of short crude trading vehicles... But, that being true... is a detail... and, it is my response to change, but it does NOTHING to alter the larger issues in market fundamentals ? When I choose to own a short crude position, again, that prior history will be an item of awareness... but it won't dictate my choice of vehicle in my next trade... ? Instead, I will make the analysis again... about where and why advantage exists in one versus another ? In the degree that people err in thinking "the past doesn't matter"... because of recent changes in the details... in the degree they change fundamental opinions based on that minor change... ? That's error. The value of history... in context of Santayana's famous quote ... ? The value that is accessible... in market terms... is in your own ability to remember... in competition with others expectations based in error derived from not remembering ? So, the value of history expands... non-linearly... in the degree that others denigrated its value. That's not about history in the details ? It's not about history in the school sense of memorizing dates... rather than in the larger perception of relationships between things... based in an understanding of how and why the events being considered... ARE related to the nature of decisions and those functions relative to some larger reality... that a focus on the "new" in the details can distract you from properly valuing ? Value investing... is based entirely on that expectation that people have very poor skills in valuation... and will almost always get it wrong... not in the details day to day, perhaps... but in the big picture in the long term ? You can argue that's wrong... and I'll accept your argument... when you can explain to me how you can prove that Warren Buffett is a failure as an investor ?
