I believe, in the stock market - that's one of my fields - that most people are irrational. And to be irrational, you can be irrational in so many different ways that, practically, the result is indeterminate.
Interpretation
The stock market is often influenced by irrational behavior, leading to unpredictable outcomes.
Paul Samuelson suggests that in the realm of the stock market, many investors act irrationally, which can manifest in various forms. This irrationality not only complicates analysis but also contributes to the unpredictable nature of market results, highlighting the challenges of forecasting in finance.
In practice
During an investment seminar, I quoted Samuelson to illustrate the unpredictability of market trends.
To a person of analytical ability, perceptive enough to realise that mathematical equipment was a powerful sword in economics, the world of economics was his or her oyster in 1935. The terrain was strewn with beautiful theorems begging to be picked up and arranged in unified order.
I can't think of a president who has been overburdened by a knowledge of economics.
My belief is that nothing that can be expressed by mathematics cannot be expressed by careful use of literary words.
Politicians like to tell people what they want to hear - and what they want to hear is what won't happen.
My family was well off but not rich. I spent the four years I was an undergraduate working on the beach. And it wasn't because I was lazy; it was because my freshman class would go to a hundred different employers and wouldn't get a nibble. That was a disequilibrium system. I realized that the ordinary old-fashioned Euclidean geometry didn't apply.
Economics has never been a science - and it is even less now than a few years ago.
By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives.
Saving is a fine thing. Especially when your parents have done it for you.
If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.
Most women file for bankruptcy in the aftermath of a serious medical problem, a job loss, or a family break up. It is hard to protect against those.
Well, I think the biggest mistake is not learning the habits of saving properly early. Because saving is a habit. And then, trying to get rich quick. It's pretty easy to get well-to-do slowly. But it's not easy to get rich quick.
But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
Subscribe for the occasional hand-picked quote. No noise.