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Turfscape (41.08)

I'm Proud of that D minus

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April 07, 2010 – Comments (4)

So, former Fed Chairman, Alan Greenspan, said today that, although he made mistakes during his tenure, he was right "70% of the time". 70%! That equates to barely a passing grade in school terms! That's like the dumbest kid in class status! This is the guy who was supposed to be the "Smartest Man in the Room". And he's excusing his behavior by saying, 'well...at least I didn't get an F'.

http://money.cnn.com/2010/04/07/news/economy/Greenspan_financial_crisis_commission/index.htm

Now, I'm not one to put this whole mess on Greenspan's shoulders. He didn't help matters, but there's lots of blame to pass around. But to put up a defense of "I was right 70% of the time"? Are you serious? Hey, Greenspan...how'd you like to go visit a doctor who brags "but look at the 70% of my patients that I DIDN'T kill"? How's about you put your life savings with a money manager who say "sure I lost 30% of your wealth...but what about the 70% I DIDN'T lose"? How's about you hire a general contractor who's sure to get 70% of your house built correctly?

Keep bragging on that D- there Alan...heck, go hang it on the fridge.

4 Comments – Post Your Own

#1) On April 07, 2010 at 4:44 PM, ocsurf (< 20) wrote:

Sorry to break this to you but 70% is a C-....a D- would be 60%...just clarifying

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#2) On April 07, 2010 at 5:18 PM, starbucks4ever (98.98) wrote:

To play the devil's advocate, in the stock market, one can do well enough even when he's right 25% of the time.

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#3) On April 07, 2010 at 5:21 PM, TMFAleph1 (95.99) wrote:

You can't compare making monetary policy to taking a college exam. In the former field, being right 70% of the time is be an excellent result, if one is being is being judged purely on the frequency with which one is correct.

Unfortunately, even if we assume that Greenspan's estimate of his success rate is correct, it is the magnitude of the damage he did when he was wrong that is the real problem.

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#4) On April 07, 2010 at 5:27 PM, TMFHousel (94.18) wrote:

Agreeing with Alex (TMFMarathonMan).

In investing, if you're right 99% of the time, but the 1% of the time you're wrong it bankrupts you (Long-Term Capital Management?) you're a failure. 

If Greenspan was right 70% of the time, sure, that actually isn't bad. But the 30% he got wrong nearly cost the economy its life.  

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