Comments on: The Danger of Rationality

By: Dana

Dana — Sun, 01 Mar 2009 21:14:25 +0000

I don’t think there was any rationality behind what most analysts and the business media peddles. More often than not, they grab the most plausible story and try to string everything together in a way that’s supposedly easily understood. The forces that propel the market are most likely too multi-faceted, unpredictable, and maybe even unscrupulous to spin on network TV.

But in the case of oil, most people were wrong, including Warren Buffett. And that says something.

http://www.businessweek.com/ap/financialnews/D96KQ9VG0.htm

By: Linkstuff Feb 27

Linkstuff Feb 27 — Fri, 27 Feb 2009 10:02:05 +0000

[...] Financial Blogger has an interesting take on predictions in The Danger of Rationality. [...]

By: Sophie

Sophie — Wed, 25 Feb 2009 13:47:49 +0000

hahaha it would probably be my hair dresser… 1 year ago was probably the best time to sell

By: IS

IS — Wed, 25 Feb 2009 03:30:06 +0000

and now the shoeshine boy is probably telling you to sell:)

By: Sophie

Sophie — Tue, 24 Feb 2009 18:14:10 +0000

Actually, my father used to tell me that story haha it can be a nice story for your kids!!!

You have to put yourself into context of the late 1920s. It was in a period of great economic growth (introduction of automobile, radio, telephone, electricity boom, skyscrapers sprang up like mushrooms …). Everybody was getting into the financial market, Everybody was talking about stocks, and that stockbroker knew it was time to sell, cause even the shoeshine boy was giving him some stock tips….

By: The Financial Blogger

The Financial Blogger — Tue, 24 Feb 2009 17:06:36 +0000

Sophie;
I prefer the following quotes:
“the time to buy is when there’s blood in the streets.”
- Baron Rothschild, an 18th-century British nobleman

By: Sophie

Sophie — Tue, 24 Feb 2009 16:55:26 +0000

That’s right! It also reminds me of an old Wall Street saying from the Great Depression: “when everybody’s getting into the market and even the shoeshine boy is giving stock tips, then it’s time to sell.”

By: CanadianFinance

CanadianFinance — Tue, 24 Feb 2009 15:49:32 +0000

This reminds me of Bernstein’s Four Pillars of Investing… once all the articles were written about oil or China being the next big thing, you know it’s time to get out.

By: Frank

Frank — Tue, 24 Feb 2009 15:35:50 +0000

Put it that way: I would qualify this as the danger of irrationality. Human beings are not infallible. Because good information is scarce and not evenly distributed, there are some errors in perception and some errors in the process of formulation. With so important drops in financial markets, it is hard to understand what it is happening right now. Even if economists try to put financial explanations to irrational stock markets, psychology is taking over. There’s no more rationality!