10 Lessons Not Learnt

A great paper by James Montier of GMO that looks at behavioral finance and the implications for investment performance and bubbles.

It includes some great quotes from notable figures:

“There is no housing bubble to go bust.” (Ben Bernanke, October 27, 2005)

Sir John Templeton said, “It is impossible to produce a superior performance unless you do something different from the majority.”

Another one from Ben Graham: Mathematics is ordinarily considered as producing precise and dependable results; but in the stock market the more elaborate and abstruse the mathematics the more uncertain and speculative are the conclusions we draw there from … Whenever calculus is brought in, or higher algebra, you could take it as a warning that the operator was trying to substitute theory for experience, and usually also to give to speculation the deceptive guise of investment.
bad dream