• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Chris Leithner

  • About Chris
  • Archive
  • Links
  • Books – Australia
  • Books – Canada
  • Books – USA
  • Show Search
Hide Search

Leithner Letter Nos. 184-187

Chris · March 26, 2015 ·

26 March 2015 – 26 June 2015

analysis, Benjamin Graham, wrote in The Intelligent Investor in 1949: “The investor’s chief problem – and even his worst enemy – is likely to be himself.” … From financial history and from my own experience, I long ago concluded that regression to the mean is the most powerful law in financial physics: Periods of above-average performance are inevitably followed by below-average returns, and bad times inevitably set the stage for surprisingly good performance. But humans perceive reality in short bursts and streaks, making a long-term perspective almost impossible to sustain – and making most people prone to believing that every blip is the beginning of a durable opportunity.

My role, therefore, is to bet on regression to the mean even as most investors, and financial journalists, are betting against it. I try to talk readers out of chasing whatever is hot and, instead, to think about investing in what is not hot. Instead of pandering to investors’ own worst tendencies, I try to push back. My role is also to remind them constantly that knowing what not to do is much more important than what to do. Approximately 99% of the time, the single most important thing investors should do is absolutely nothing.

There’s no smugness or self-satisfaction in this sort of role. The competitive and psychological pressure to give bad advice is so intense, the demand to produce noise is so unremitting, that I often feel like a performer onstage before a hostile audience that is forever hissing and throwing rotten fruit at him. It’s hard for your head to swell when you spend so much of your time ducking.

Jason Zweig
Saving Investors from Themselves
WSJ.com MoneyBeat (28 June 2013)

What Happens When Rates of Interest Rise?

“The Reserve Bank [of Australia] has lost faith in the economy staging a recovery,” The Australian stated on 5 February 2015 (RBA’s Growth Warning as Rates Cut to New Low). During the past three years it has halved its Overnight Cash Rate to the present 2.25%. Lower rates clearly haven’t caused a recovery; will record low rates do so? It doesn’t seem to matter: futures markets presently indicate that by mid-2015 the RBA will cut the OCR to 1.75%. During the past year, ever more people have extrapolated these unprecedentedly low rates far into the future. On 11 June 2014, for example, in What if Interest Rates Stay Low for the Next 70 Years? The Daily Reckoning Australia stated:

Rates have been going lower for years. In some [Western] nations, [counterparts of the OCR have] now reached [0.5% in Britain and 0.25% in the U.S.], a situation that would have been hailed as impossible just a few years ago. What if interest rates were to stay low for the rest of the century? This is definitely a possibility.

To read the entire Newsletter (PDF), click here.

Filed Under: Uncategorized

Primary Sidebar

Subscribe to the Leithner Letter

* indicates required

About this website

About this website

This site hosts newsletters, books, etc., written initially for shareholders of Leithner & Company Pty Ltd and subsequently for anybody who wants to read them. … [Read More] about About this website

Recent Posts

  • The Risk of Higher Rates the RBA’s Overlooking March 20, 2023
  • Why Australia won’t become a “renewable energy export superpower” March 6, 2023
  • Farewell low “inflation” and interest rates? February 20, 2023
  • “Global Energy Transition” – Fact or Fiction? February 6, 2023
  • Will 2023 be beautiful or ugly? January 23, 2023

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • June 2020
  • March 2020
  • November 2019
  • July 2019
  • March 2019
  • November 2018
  • August 2018
  • April 2018
  • September 2017
  • July 2017
  • March 2017
  • November 2016
  • July 2016
  • March 2016
  • November 2015
  • July 2015
  • March 2015
  • October 2014
  • June 2014
  • February 2014
  • October 2013
  • July 2013
  • February 2013
  • November 2012
  • July 2012
  • April 2012
  • December 2011
  • August 2011
  • April 2011
  • November 2010
  • July 2010
  • April 2010
  • December 2009
  • September 2009
  • June 2009
  • March 2009
  • December 2008

Copyright © 2023 · Chris Leithner