"You don't have to be right to make money [valuing companies]," Aswath Damodaran says. "You just have to be less wrong than everybody else.”
In Lew Wallace's Ben-Hur: A Tale of the Christ, a sense of powerlessness runs through the dramatic story of betrayal, revenge, and redemption. As the novel unfolds, the sea comes to symbolize the vast impersonal forces — chaos, volatility, unpredictability, shifting currents of fortune — that seem to shape individual destinies. Looking back over the articles published in CFA Institute Magazine during 2015, this literary theme seems fitting for investors and markets over the past year.
All the recent market scares have been driven by the same implied menace. Whether it’s another round of anxiety about Greece, another head fake by the US Federal Reserve on raising rates, or fears about China’s economy, investors appear to be nervous about a major correction, downturn, or crash. But what if the real danger were of a very different sort?
If it wasn’t for the impulsive, overconfident, irrationally exuberant, cognitively biased masses and their quirky behavior, we would have no markets at all.
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