Jamie Montier has been transmogrified. He now resides at GMO, where he works with Jeremy Grantham and Edward Chancellor. The latter is author of Devil Take The Hindmost, which is a rip roaring, roller coaster of a read, dare I say, a veritable financial thriller. You’d probably have to go all the way back to France’s Henry IV to find just as many Hugenots gathered together in the same room. Their clients should be thankful though because GMO brings home the bacon and produces a lot of thought provoking work too.
The chart above comes in Montier’s most recent document, which lists the ten things that need to be learned from the financial crisis. The chart shows the futility of forecasting. Let’s face it, if forecasting worked we’d all be socialists by now. Montier’s chart reminds me of a story, which I think was told by Kenneth Arrow, who spent the Second World War working in the US Navy’s Metrological department. He was asked to give a forecast for the weather some weeks, or it might even have been months, ahead for the D Day landings. Arrow told his superior that it was impossible to make a forecast that far out. “ I don’t care, just give me a forecast, any forecast,” he was told. This chart should be kept in mind when reading our piece of Happy Accidents.