Re: poly: Re: Why interest rates may stay low

From: Perry E. Metzger <>
Date: Wed Mar 25 1998 - 12:32:30 PST

Robin Hanson writes:
> I wrote:
> >I don't see that you've offered any reasons to think that the time
> >itself is important, beyond the uncertainty that usually goes with it.
> Perry writes:
> >If the rate of return is very uncertain, a short investment may be
> >worth a "gamble", since at worst you are out within a short time, but
> >a long one is simply too hard to figure out -- there will be no exit
> >strategy for the investor. ...
> >Long time scales have a synergistic bad effect -- without a way
> >to quantify the likely rate of return, we might as well have a low or
> >nonexistant rate of return if the investment is far enough off. If you
> >are risking the money for two years, that isn't a big deal, but it is
> >different if you are risking it for three hundred.
> I've read this several times, but still only see the claim repeated.
> I don't see any reasons I understand.

Perhaps because you've spent too much time in academia and not enough
investing your money.

Imagine tomorrow morning someone came up to you, Robin Hanson, and
asked you to invest your money in something with no way to calculate
the rate of return, no way to calculate the odds of any particular
rate of return, and no exit strategy for 150 years.

You'd tell them to take their prospectus and shove it.

Perhaps this is so obvious to me that I can't articulate the sort of
fully academic answer you are looking for. I suspect its obvious to
other people, too, though.

Received on Wed Mar 25 20:38:24 1998

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