Category: Quotes

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George Soros: Assume that markets are always wrong…

The prevailing wisdom is that markets are always right. I take the opposition position. I assume that markets are always wrong. Even if my assumption is occasionally wrong, I use it as a working hypothesis. It does not follow that one should always go against the prevailing trend. On the contrary, most of the time the trend prevails; only occasionally are the errors corrected. It is only on those occasions that one should go against the trend. This line of reasoning leads me to look for the flaw in every investment thesis…. I watch out for telltale signs that a trend may be exhausted. Then I disengage from the herd and look for a different investment thesis. Or, if I think the trend has been carried to excess, I may probe going against it. Most of the time we are punished if we go against the trend. Only at an inflection point are we rewarded.

~ George Soros

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Ludwig von Mises: The Causes of Economic Crisis (1931)

Credit expansion cannot increase the supply of real goods. It merely brings about a rearrangement. It diverts capital investment away from the course prescribed by the state of economic wealth and market conditions. It causes production to pursue paths which it would not follow unless the economy were to acquire an increase in material goods. As a result, the upswing lacks a solid base. It is not a real prosperity. It is illusory prosperity. It did not develop from an increase in economic wealth [i.e. the accumulation of savings made available for productive investment]. Rather, it arose because the credit expansion created the illusion of such an increase. Sooner or later, it must become apparent that this economic situation is built on sand.

Hat tip to John Hussman

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F. Scott Fitzgerald: The rules of life are written…

An insight into the mind of F Scott Fitzgerald, from Malcolm Cowley. Originally published in The New Republic on August 20, 1951.

Tender Is The Night was published in the spring of 1934…. It dealt with fashionable life in the 1920’s at a time when many readers wanted to forget that they had ever been concerned with frivolities; the new fashion was for novels about destitution and revolt….Nor was it a popular success as compared with Fitzgerald’s first three novels, which had been easier to write: in the first season it sold 12,000 copies; This Side of Paradise had sold 50,000 in a similar period. Presently the new book seemed to be forgotten, although it really wasn’t; it stayed in people’s minds like a regret or an unanswered question. “A strange thing is that in retrospect his Tender Is the Night gets better and better,” Ernest Hemingway told Maxwell Perkins, of Scribner’s, who was the editor of both novelists. In scores of midnight arguments that I remember, other writers discovered that they had the same feeling about the book.

Fitzgerald continued to brood about it, although he didn’t blame the public or the critics. It was one of the conditions of the game he played with life to accept the rules as they were written; if he lost point and set after playing his hardest, that was due to some mistake in strategy to be corrected in the future. He began looking for the mistake in Tender Is the Night….

Read how Fitzgerald re-wrote the novel at How F. Scott Fitzgerald Wrote and Revised Tender Is the Night | New Republic.

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Margaret Thatcher: Russia

She’s ruled by a dictatorship of patient, far-sighted determined men who are rapidly making their country the foremost naval and military power in the world. They are not doing this solely for the sake of self-defence. A huge, largely land-locked country like Russia does not need to build the most powerful navy in the world just to guard its own frontiers. No. The Russians are bent on world dominance, and they are rapidly acquiring the means to become the most powerful imperial nation the world has seen. The men in the Soviet politburo don’t have to worry about the ebb and flow of public opinion. They put guns before butter, while we put just about everything before guns. They know that they are a super power in only one sense — the military sense. They are a failure in human and economic terms.

~ Margaret Thatcher (1976)

In response to this speech, the Soviet Army newspaper Red Star labelled Thatcher “the Iron Lady”. Intended as an insult, Thatcher welcomed the moniker that would stick for the remainder of her political career.

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