Rational Irrationality

“The real reason that capitalism is so crash-prone”
Yet another take on the real explanation for the GFC – behavior that is individually rational can be collectively irrational.  Prisoners Dilemma and all that. 

Index Funds Win Again

Again… and again

http://www.nytimes.com/2009/02/22/your-money/stocks-and-bonds/22stra.html

“The investment implication is clear, according to Mr. Kritzman. “It is very hard, if not impossible,” he wrote in his study, “to justify active management for most individual, taxable investors, if their goal is to grow wealth.” And he said that those who still insist on an actively managed fund are almost certainly “deluding themselves.””

Video – Satire on investment professionals, sub-prime etc.

The Long Johns – The Last Laugh – George Parr – Subprime

http://www.youtube.com/watch?v=SJ_qK4g6ntM&

Tells it pretty much like it is

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Dice roll as good as expert advice

Yet more evidence that investment professionals have no competence in their core area of “expertise”.

The Age newspaper does its own survey of experts’ buy and sell recommendations in 2005.

A couple of years later, it turns out you would have done just as well purchasing their “sells” as their “buys”.

The article draws the wrong lesson however.  It claims that the moral is to pay as much attention to the sell recommendations as to the buy ones.

The proper lesson is – pay these “experts” no attention at all.  And certainly don’t allow them to make any money at your expense.

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