Why are so many financial analysts and economists seemingly blind to the growing danger facing investors?
One of the important things to see when you're looking at investment analysts or economists is not that they're not smart. A lot of these people are pretty smart, they're certainly well credentialed, Harvard degrees, many years of experience on the street or whatever, Dick Fuld or others a head in Lehman Brothers, these are bright, capable people, they wouldn't get in these positions if they weren't. So why do they ever make mistakes... and we know they make mistakes? A lot of them have, 1929 entered at… we were obviously valuing companies that were outrageously different, or in 2008, or what's happening right now, even though this mistake isn't showing up, what's happening here is very bright people and smart people often see what they want to see. Doesn't that make sense? Even if they're smart, they don't want to see something that's going to be a real negative to them or real negative to their industry, to their economy or whatever and that's true on a personal level. Think of person whose running a business, ever seen somebody who maybe likes to run a business a certain way and doesn't want to see what's going on.
Ever heard of a boss like that or whatever? On a personal level, maybe it's a marriage or relationship, where we don't really want to see what's going on? It might be very smart people. In fact, one of my friends used to say, "I know a lot of very smart people in some really dumb relationships." It isn't just finance, it's just that we like to see what we want to see and that's why very smart people, very highly credentialed people can make terrible mistakes and it has been proven in the past -- In the depression, when Irving Fisher was a great economist, made some rather horrible predictions about how we're at a plateau of stocks, continuously high plateau. Wasn't too much longer and we had the big depression and the collapse and on and on. Internet, obviously, we saw problems. Ben Bernanke said in 2008 after Bear Stearns that everything's fine with the financial system. What's happening then and now, even though it's not proven right now, is that very bright people make mistakes because they want to see what they want to see and they don't want to see the things they love or like get hurt and so they make predictions based on what they want, not on what's really there.