Monday, June 6, 2011

Hugh Hendry April commentary

The April monthly report for the Ecletica Fund managed by Hugh Hendry recently escaped to the internet and as usual Mr. Hendry weaves disparate topics into his commentary.
Accepting absurdity?
I was reading something recently about the Nobel Prize winner Richard Feynman that made me think that money management was perhaps similar to physics in that you advance by accepting absurdities. The history of physics, he claimed, is one of unbelievable ideas proving to be true. "Our imagination is stretched to the utmost not, as in fiction, to imagine things which are not really there, but just to comprehend those which are".
This one comment really struck me as I have a scientific degree and the idea of the absurd eventually becoming accepted wisdom rings true with me.  While studying various bodies of scientific knowledge it's always interesting to see how sometimes the observational data was not yet supported by theory (and thus absurd) while at other times it was the chalkboard crowd who's absurd theories were dismissed as impossible until observational data caught up to the theory.

Unfortunately the intellectual framework of truth is truth, I just can't prove it yet can get you into serious trouble in the markets.  There's your opinion, the truth, and the market.   I have had to struggle at times with the experience of my opinion of a securities' worth varying from the market's opinion, and even worse diverging in opposite directions.  Remember, you can be right and still lose money.

edit: Sorry but my source for this had his Scribd account closed.  I'm looking for another copy out there in internetland.

edit 2: Found another copy of the report, here it is:

ht TheTailchaser

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