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James Montier Is Back, Discussing Ten Lessons Not Learned From The Bad Dream
James Montier is back, with a new home at GMO, and issues his first white paper which is an impressive analysis of the past two years and specifically how nothing has changed as we happily trudge along to the next major "correction." His 10 lessons not learned from the greatest market crash is a must read for everyone who refuses to drink the Kool-Aid. These can be summarized as follows:
- Lesson 1: Markets aren’t efficient.
- Lesson 2: Relative performance is a dangerous game.
- Lesson 3: The time is never different.
- Lesson 4: Valuation matters.
- Lesson 5: Wait for the fat pitch.
- Lesson 6: Sentiment matters.
- Lesson 7: Leverage can’t make a bad investment good, but it can make a good investment bad!
- Lesson 8: Over-quantification hides real risk.
- Lesson 9: Macro matters.
- Lesson 10: Look for sources of cheap insurance.
Also, just what is it about the lead-content of water in Princeton, NJ?
“The consensus of judgment of the millions whose valuations function on that admirable market, the Stock Exchange, is that stocks are not at present overvalued … Where is that group of men with the allembracing wisdom which will entitle them to veto the judgment of this intelligent multitude?” (Joseph Stagg Lawrence, Princeton economist, Autumn, 1929)
70 years later:
“There is no housing bubble to go bust.” (Ben Bernanke, October 27, 2005)
Montier's conclusion:
Sadly the evidence from both history and psychology is not encouraging when it comes to supporting the idea that we might learn from our mistakes. There is a whole gamut of behavioral biases that prevent us from learning from mistakes. However, just this once I really hope this time is different!
Alas, Montier is far too optimistic: the next crash will come and only then will the revisionist questions arise.
h/t Stefan
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I believe the final sentence was tongue in cheek, no?
"However, just this once I really hope this time is different!" is playing on the concept of never learning from our mistakes, such as, in the past, hoping that the next time would be different, right?
I believe the final sentence was tongue in cheek, no?
"However, just this once I really hope this time is different!" is playing on the concept of never learning from our mistakes, such as, in the past, hoping that the next time would be different, right?
I was watching CNBC this morning - sorry, I love this station. It's fucking hilarious if you realize it's just bad theater - and their guest was on touting how everyone should buy Exxon and Chevron because they are till "ten points off their all time highs"?
Jesus Mary and Joseph, do these guys really believe we are going to see 14000 on the Dow again?
CNBC may be right after all (even though this is a Permabear writing) - I know family that still thinks the stock market is the way to go and have not sold out of it !!
By the by, I have a friend who worked for a bank trust company. He was laid off of course....guess what, he applied for a job with MS, they are hiring like it was 1999.
Total SNAFU.
Lesson learned - nada.
"This time it's different."
Especially in GOLD, the only one asset that can NEVER be worth less... ever!
I sold all my physical possessions and bought gold and canned hamz because my barber said so!
I'll be rich in 2 months! This time it is different! Gold bitchez!!! Hoo-rah!!
Your comment is SPAM - way past its freshness date.
Well luckily for me, gold never goes out of style. It's like Mr. T's mohawk, or Prince's geri curl.
Gold went out of style from 1980 to 2000, no?
Not really that "in-fashion" since Bear Stearn went bankrupt.
-BBH
Don't do what everyone else is.
I hear Real Estate never goes down either. Buy some of that too
I hear Real Estate never goes down either. Buy some of that too
I once used to visit the TSR forum where a person with the same Nick (and attitude) was usually in the centre of the most heated discussions.
It's a small world, teh internetz :)
I am sure that most posters to this board would agree that Mr. Montier is completely right.
Hope for the future? Liar's Poker anyone?
Man is a communicating, herding, stampeding animal. The wildebeest crossing a crocodile infested stream seem to do best staying in the middle of the pack.
Is that the future; stay in the middle of the pack?
The wildebeest example is oversimplified - the majority always ends up impoverished and at the will of those with either geniune insight or insider information. And in our current state of affairs we have the latter jailing the former so that the corruption may continue.
Following the author's line of reasoning I should buy gold because it is historically undervalued when priced in Federal Reserve Notes and the herd seems to be think everything is okay. Buying precious metals is extreme minority thinking. But don't stop with PMs - get ready for the biggest shitstorm of all time.
This whole read is little more than a sophisticated Newsweek article you might read while waiting to get your hair cut.
Maybe not cutting edge or ground-breaking ideas, but simply logic ignored by approximately 99.999999% of the populus (or at least 99.999999% of government officials and people in the finance industry).....
Does this guy EVER make money? Didn't he miss the entire 60% rally in stocks? Isn't it true that Graham and Dodd is actually ia mediocre approach to making money - rejected by none other than Graham protege Warren Buffet?
Anybody who puts their picture on their work has to be a total tool.
Does this guy EVER make money? YES
Didn't he miss the entire 60% rally in stocks? NO
https://www.gmo.com/America/CMSAttachmentDownload.aspx?target=JUBRxi51II...
Facts are simple and facts are straight
Facts are lazy and facts are late
Facts all come with points of view
Facts don't do what I want them to
Once the BS good news runs out it will
ONEY and I care NOT who writes the LAWS," Nat_han R0thschi1ds
Learn the truth behind the fake recovery!!FED does that for the Financial Aristocracy and D1CTAT0RSHIP!
“What to do:
1. Allow the Financial Dictatorship where Wall Street Banksters Owns Congress? http://bartspace12.blogspot.com/2010/02/deficits-unpaid-banks-fed-move.html
2. A State trying to serve its Communities' Needs on Main Street while maximizing productivity and employment?
Is this a Difficult Decision? If you are a Bankster you want #1! If you are everybody eles you want #2!”
“Yes and they are using REAL LOANS - NOT FAKE FRAUDULENT PAPER that is "SURE to FAIL!" so Massive Casino Bets can be ” PAID to CR00KS!
It takes bad dreaming to make good screaming. Sides of a coin. Sides of a coin.
The impending dollar rally that I warned about from mid 2009 onwards has only just started.
USD Index daily and weekly charts remain bullish.
Vice versa for the EURO and DOW/SP00.
http://www.zerohedge.com/forum/market-outlook-0
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