I am really enjoying Matt Brice's blog. He is the principal at The Sova Group, a new money management firm.
Very smart guy.
Here is a typically nice post of his. In it, he contrasts two economists who won Nobel prizes earlier this month, Eugene Fama and Robert Shiller. Like Matt, I am a Shiller fan. (If you have been reading this blog, that's not news.)
At the link, you'll see a description of one finance course offered by Fama, and another offered by Shiller. Fama's course is, in esssence, really about math; his models capture somewhat less of the world than Fama believes. Shiller, on the other hand, is actually trying to study reality directly, in all its messiness.
The world is big enough to house both modes of thought, but I agree with Matt that studying with Shiller's approach is going to be a much better use of time.
Matt and I think in similar ways about investments. Coincidentally (?), we each are non-practicing lawyers; and we each worked, prior to becoming investment managers, in mergers and acquisitions. Observing the workings of financial markets up close will cure almost anyone of the tendency to be overly impressed with pure math as a way of describing them.
Speaking of which, there is a wonderful new interview in the Finanical Times of Alan Greenspan, by Gillian Tett. Of interest: Greenspan's own belated, post-crisis realization of the limited ability we have to model financial markets mathematically. Link is here (registration may be required). What took him so long?
Don't get me wrong; I believe in valuing companies largely based on numbers. But that's very different from predicting where securities will trade in the market in the short and medium term. As Ben Graham put it, the market is a voting machine in the short run, and a weighing machine in the long run.
De gustibus non est disputandum -- and non est computandum, too.
