PHOTO: 123RFNZ may be facing economic collapse post coronavirus pandemic.
OPINION: Given a choice between altering my belief system and ignoring facts; I usually prefer to ignore facts. I’ve spent decades investing in the things I believe in and the cost of discarding these ideas is too painful compared to the simplicity of ignoring evidence.
Helpfully I do not have many beliefs. I alternate between stoicism and nihilism and have never really committed to either. Catholicism was discarded in my teenage years and my adherence to libertarianism is philosophical not empirical.
Which brings me to Air New Zealand.
Let me elaborate. The Efficient Market Hypothesis, which I stubbornly remained attached to decades after I knew it was bunkum, is the idea that the price of an asset is a function of all of the available information. This assumes rational investors and some liquidity in the market.
Behavioural Economics is a relatively recent idea that, if I may condense an entire school of economic thought to a pithy retort; assumes people are emotionally driven, intellectually lazy and irrational when it comes to investing.
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