Publications: Notes at the Margin

A Fool and His Money Are Soon Parted (January 2, 2012)

 

The human mind seeks out very simple cause-and-effect explanations. At one time, some may have believed a rooster’s crowing caused the sun to rise. For centuries, the Catholic Church preached that the earth was the center of the universe. Admittedly, simple explanations sometimes work and can yield high profits. Those trading commodities invariably seek simple reasons for market behavior and are right much of the time. On occasion, however, they make very large mistakes. When they do, they impose huge losses on those who follow them. As 2012 begins, they may be about to inflict one of the largest losses ever.

 

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