The answer apparently is zero, because, as the chart below clearly demonstrates, economists never predict recessions. This is just one example of why we advise clients to ignore virtually all of the economic and stock market discussions going on in the mass media. Because if economists with PhD’s can’t predict events intelligently imagine how good the talking heads on CNBC must be.
This chart was created by James Montier (at Societe Generale in London) whose book on Behavioral Finance was subtitled “Insight Into Irrational Minds and Markets.” We like the subtitle because it describes so much of what we read and hear daily in the media. Nothing could be more irrational than highly trained “experts” who constantly talk about and publish research on the economy but who NEVER forecast the thing we care most about – when things are going to go bad.
This is why we say that our primary job is to provide “rational advice” to our clients. It turns out that rational advice is much harder to come by than people imagine. The good news for us is that high IQ is not necessarily required. As Warren Buffett said about himself: “Plenty of people have higher IQ’s…but I am rational about things.”
The ongoing purpose of this blog will be to provide clients a source for “rational” economic and investment understanding. We hope to do so in a simple, summarized and entertaining (relatively speaking) form. For important issues which clients may want to know more about we will provide links to more in-depth discussions and explanations.
So, stay tuned for more and remember – ignore as many economists as possible.
