{"id":421,"date":"2010-05-10T08:36:00","date_gmt":"2010-05-10T12:36:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=421"},"modified":"2018-08-19T10:06:20","modified_gmt":"2018-08-19T14:06:20","slug":"understanding-information-with-will-power-is-the-key-to-crisis-evasion","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/05\/10\/understanding-information-with-will-power-is-the-key-to-crisis-evasion\/","title":{"rendered":"Understanding information with will power is the key to crisis evasion"},"content":{"rendered":"<p><span style=\"font-size: 16px;\">Back in October 2008 in the first days of the blog and in the midst of a Second Great Depression talk, I wrote a post in which I said such an event was highly unlikely.\u00a0 Among the reasons I gave for this were the:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 16px;\">greater understanding of both fiscal and monetary policy<\/span><\/li>\n<li><span style=\"font-size: 16px;\">increased speed of data reporting, and<\/span><\/li>\n<li><span style=\"font-size: 16px;\">increased transparency of data collection<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 16px;\">All three of these address the greatest challenge of investing: understanding information.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">I bring this up right now because of the economic and financial crisis that has unfolded in Europe.\u00a0 Financial markets were pricing in a doomsday scenario that just is highly unlikely given the three conditions I named above.\u00a0 The only thing that seemed to be missing in averting the <span class=\"goog-spellcheck-word\">eurozone<\/span> crisis was will power on the part of finance ministers in Europe.\u00a0 The activity over the weekend seems to have demonstrated that the information of the crisis was understood and that <strong>it would be acted upon.<\/strong><\/span><\/p>\n<p><span style=\"font-size: 16px;\">My point is that going forward this is a powerful heuristic for assessing economic and financial crisis:<\/span><\/p>\n<p><span style=\"font-size: 16px;\">1.\u00a0 Is the information about an economic and financial crisis understood?<\/span><br \/>\n<span style=\"font-size: 16px;\">2.\u00a0 If there is, then is there will power to do something about it?<\/span><\/p>\n<p><span style=\"font-size: 16px;\">In the run up to the most recent United States recession, there was a widely held belief that the real estate market was a massive bubble.\u00a0 So the information was understood.\u00a0 However, there was no will power to do anything about it until, unfortunately, it was too late to take preventative actions.\u00a0 Instead, in the midst of crisis will power was suddenly manifested.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Going forward, let&#8217;s hope that policy makers and regulators are more demonstrative of their understanding of information and take preventative action.\u00a0 Crisis should not be the only source\u00a0for force of will going forward.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Lastly, because of the three\u00a0reasons why a Second Great Depression seem impossible to me I have been a bull in both of the most recent economic crises.\u00a0 It&#8217;s also my opinion that investors still do not fully appreciate that those points are permanent arrows in the quiver of regulators and policy makers.\u00a0 They will not be easily forgotten.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Back in October 2008 in the first days of the blog and in the midst of a Second Great Depression talk, I wrote a post in which I said such an event was highly unlikely.\u00a0 Among the reasons I gave for this were the: greater understanding of both fiscal and monetary policy increased speed of 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