Why Do We Continue To Use Economic Theories That Don’t Work?

24th of April, 2018

There is NO doubt that understanding the Investment & Credit Cycle and how they are underpinned and effected by the underlying economic drivers provides us with a Very Powerful Investment Edge. We spend a lot of time at both our Forecasting Conferences and Opportunity Summit reviewing how the drivers are manifesting this cycle and the opportunity that this is creating for astute investors.

It is amazing how many investors have NO idea of the cycle and consequently they miss out on so many opportunities…

Today I re-read this article and just couldn’t let it slide! Although it’s quite old, the point we can extrapolate from it is just as relevant now as it was when it was written.

I would urge you all to read it and then think about the madness it purports? (See the link at the bottom of this Blog)

I just don’t understand why Economists continue to use Theories that just DON’T work?

I quote from this article:

Hugh Giddy, senior portfolio manager and head of investment research at fund manager Investors Mutual, says “it’s not unusual that causality between data and the sharemarket is weak because much of the expectation is founded on economic theory that doesn’t work.”
“Economic causality or data points don’t always work. If the economy is indeed weak you would think that would make you worry about bank stocks, because they are cyclical. That’s where the threat to their profit comes from, which is a big rise in unemployment,” Mr Giddy said.
“Of course, we’ve got another housing bubble going on, a continuation of a 25-year housing bubble, and everyone seems to be in la la land that house prices can continue to rise way faster than inflation plus population growth combined,” he said.

It just amazes me that the inadequacies of accepted Economic Theories can be identified yet they are still embraced? Here Mr Giddy even goes as far to recognise the disconnect with the economic data reported and house prices – but fails to provide a valid explanation!

I repeat “There is NO doubt that understanding the Investment & Credit Cycle and how they are underpinned and effected by the underlying economic drivers provides us with a Very Powerful Investment Edge.” 

We have a very long and proud forecasting record, correctly identifying both long and short term investment opportunities for investors. We document it, review it and critically analyse our predictions. We put them in writing for participants of our courses, they’re in print – NO CHEATING! We focus on the practical application of forecasting – so investors can make extra investment gains!

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We have NO interest in this, we just want to make better, more profitable investment decisions!

If you want to learn how we can so accurately forecast the future, then join us at our Economic Forecasting Conference on the 24th & 25th of May.

Click here for more details.

Remember, Laurence J. Peter aptly described “An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today” ……

Original article Sydney Morning Herald:
“Share and Bonds See Australia’s GDP Shock Differently” by Vesna Poljkak
http://www.smh.com.au/business/shares-and-bonds-see-australias-gdp-shock-differently-20161207-gt5yr8