This publication will be celebrating its thirtieth birthday with our upcoming Fall 2004 issue. The occasion inspires me to look back at other anniversary issues, where I find a most interesting article by none other than myself, in our tenth anniversary issue of Fall 1984. I refer to it here, because the message of the article seems more appropriate to investors' experience of the past five years than it did to the moment in which I wrote it. The article carries the title of "Surprising the Smoothies: Smoothed Expectations can Lead to Rough Going." The essence of the story is that investors have a passion for creating smooth outcomes out of inherently volatile data. We act in this fashion in the expectation ― really the hope ― that variations from a specified path are either transitory or systematic, rather than the first step toward a different and possibly less familiar path.
展开▼
