Bill Bonner Letter May 2016
I’ve been wrong about many things in my life. But I’m making progress. I’ve learned to expect to be wrong… and to make forecasts carefully… always weighing the costs of error.
The real risk with any forecast is not just the risk of being wrong itself.
If I think the sun will shine tomorrow… and it rains… how much harm is done? A picnic spoiled, perhaps.
But suppose I say to myself, “I’ll go into the woods and collect mushrooms. They’re perfectly safe.” The upside is obvious. But the cost of being wrong is large.
In order to find the real risk, you need to multiply the probability of being wrong by the damage you will suffer if you are.
Asset allocation, not stock selection, is the key to investment success.”