Monthly Archives: February 2015

Anticipating Average Opinion

“We have reached the third degree where we devote our intelligence to anticipating what average opinion expects the average opinion to be.” – John Maynard Keynes, General Theory of Employment, Interest, and Money, 1936

The business entrepreneur who thinks that their business opinion is fresh, new, and desirable is one amongst many entrepreneurs who hold the same optimistic opinion.

As one amongst many, the entrepreneur is likely average in several measurements as compared to their peers.

Thus, their business opinion is likely average and the implementation of their business opinion will likely have average outcomes.

In order for the business entrepreneur to have an above average probability to have better than average outcomes, then the business entrepreneur should embrace and learn to overcome multiple trials and errors (small errors as Taleb recommends).

These multiple trials and errors filter out the clear business signals from the noise of average opinion.

Instead of anticipating average opinion, the business entrepreneur should pursue the certainty and the clarity that comes from trial and error as long as this same trial and error does not harm the business entrepreneur and other stakeholders yet causes them to grow and flourish.

“Stay on Target!” Real estate and US nonfarm employment

If you remember the movie Star Wars from 1977, then you may remember that the line “Stay on Target!” is directive, encouraging, and, perhaps, cautionary.

Directive to real estate

US real estate which is a “target” for investment is dependent on jobs growth trajectory which leads to household creation.

Total US nonfarm employment peaked at 138,365,000 persons in January 2008.

Total US nonfarm employment then declined to 129,700,000 persons in January 2010.

Total US nonfarm employment then climbed back to 138,497,000 in May 2014.

As of December 2014, total US nonfarm employment is below “on target” at 140,347,000 persons.

Encouraging to real estate

The US may be back “on target” (i.e. total nonfarm employment approximately 143,000,000 employed persons) by January 2016 albeit deflected by six years journey from where the US would have been in January 2010 had it not collided with the Death Star recession,

Cautionary to real estate

If the Federal Reserve raises interest rates in 2015 to “crush the rebellion with one swift stroke,” then the US may again be re-deflected from being “on target.”

May the Force be with you.