STREET DOGS

From The Motley Fool, three analogies that simplify what investing is all about: “[There’s] an excitable dog on a very long leash in New York City, darting randomly in every direction. The dog’s owner is walking from Columbus Circle, through Central Park, to the Metropolitan Museum.

“At any one moment, there is no predicting which way the pooch will lurch.

“But in the long run, you know where he’s heading. What is astonishing is that almost all of the [dog watchers], big and small, seem to have their eye on the dog, and not the owner.” – Ralph Wagner.

“Think of yourself standing on the corner of a high building in a hurricane with a bag of feathers. Throw the feathers in the air.

“You don’t know much about those feathers. You don’t know how high they will go. You don’t know how far they will go.

“Above all, you don’t know how long they will stay up…. Yet you know one thing with absolute certainty: eventually, on some unknown flight path, at an unknown time, at an unknown location, the feathers will hit the ground, absolutely guaranteed. There are situations where you absolutely know the outcome of a long-term interval, though you absolutely cannot know the shortterm time periods in between.” – Jeremy Grantham.

“What I have to tell you tonight is that [investing] is a lot more like quantum physics than it is like Newtonian physics. There’s just too much evidence that our knowledge of what governs financial and economic events isn’t nearly what we thought it would be.” – Dean Williams.

For those who are not sure, what these analogies tell us is, (1) always focus on the long-term progress of a stock’s business; (2) bet on the end result rather than what happens in-between; and (3) ignore forecasts, make room for errors.