Ben Davies: On Trading and the Markets
by ilene - October 24th, 2010 5:21 pm
Ben Davies: On Trading and the Markets
Courtesy of JESSE’S CAFÉ AMÉRICAIN
I made several attempts to edit this piece down a bit, but Davies’ command of language, anecdote and illustrative reference is so strong that in the end I resisted all but the most cursory deletion.
Listen well to what he says about the markets and how to trade them. I have said this myself many times in different ways, but rarely so concisely and so well.
Remarks by Ben Davies,
CEO, Hinde Capital, LondonCommittee for Monetary Research and Education
Fall Dinner Meeting
Union League Club, New York
Thursday, October 21, 2010Good evening, ladies and gentlemen. My name is Ben Davies and I co-founded Hinde Capital, a UK-based investment manager, with a gentleman called Mark Mahaffey…
The Federal Reserve chairman has said: "The economic outlook remains unusually uncertain." But economic predictions are not uncertain; they portend serious woes.
For once I agree with my namesake Ben — the outlook remains unusually uncertain. A quite stunning observation, no less. But I would not just agree with the assertion that economic predictions are not uncertain. Note the double negative there.
Economics has sought to blend epistemology, physics, mathematics, and behavioral science to try to measure uncertainty. They aim to try to predict when we might have an economic collapse, but no model has been created that manages this with much confidence, if any at all. How do you measure a risk that is unmeasurable?
No, there is nothing certain about economic predictions. Donald Rumsfeld, the former U.S. defense secretary, unwittingly declared it so at a NATO press conference in 2002, when he responded to a question on intelligence gathering:
"It’s not the certainties that make life interesting; it’s the uncertainties. There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things we know we don’t know. But there are also unknown unknowns — the things we don’t know we don’t know."
"Unknown unknowns" — at the time this was ridiculed as a piece of deliberate and meaningless obfuscation. Rumsfeld even won an award from the British Plain English Campaign for the most nonsensical remark made by a public figure. I would add that he narrowly pipped California Gov. Arnold Schwarzenegger, who commented,