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December 2, 2014

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Admit it: No one has any idea what's going on

By Morgan Housel





The financial experts are counting on you being blown-away by their research. WHY THAT'S FOOLISH --- AND DOING SO WILL COST YOU DEARLY


JewishWorldReview.com | They call economics "the dismal science." We got a good example why this week.

Three years ago, Harvard economists Ken Rogoff and Carmen Reinhart published a paper based on solid history and rigorous statistics showing that when a country's debt-to-GDP ratio breaches 90 percent, its growth plunges into negative territory. As highly respected economists, the paper influenced policymakers around the world.

"It is widely acknowledged, based on serious research, that when public debt levels rise about 90 percent they tend to have a negative economic dynamism, which translates into low growth for many years," said European Union Commissioner Olli Rehn in 2010.

"Economists who have studied sovereign debt tell us that letting total debt rise above 90 percent of GDP creates a drag on economic growth and intensifies the risk of a debt-fueled economic crisis," said Congressman Paul Ryan in 2011.

"It's an excellent study," said former Treasury Secretary Tim Geithner two years ago.

But it wasn't an excellent study. A separate group of economists tried replicating Rogoff and Reinhart's results, and couldn't. Stumped, they asked for the actual spreadsheet used in the seminal study, and found it littered with data omissions and Excel coding errors. Rogoff and Reinhart showed economies with debt-to-GDP above 90 percent experience average GDP growth of negative 0.2 percent. Fix the math errors, and the real figure is positive 2.2 percent. Oops.


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Economists and pundits have been floored at the discovery all week. As they should; it was a flagrant error.

But these kind of "now-you-know-it-now-you-don't" moments are more common than people think in economics.

Take the monthly jobs report. Almost every initial report is revised in subsequent months, often by a lot.

In September 2011, the initial report from the Bureau of Labor Statistics showed zero jobs were created that August. "Zero Job Growth Latest Bleak Sign for U.S. Economy" wrote The New York Times. "Hiring Grinds to a Halt" wrote CNNMoney. "President Zero," wrote the Republican National Committee, "THE ECONOMY ADDED ZERO, ZIP, NADA JOBS IN AUGUST."

Except that, yes, it did. Revisions later showed the economy added 132,000 jobs in August 2011, not zero. It was actually the third-best August jobs report in the previous decade. Few seemed to care about the revisions or even notice. By then, the damage had been done.

The evidence is just overwhelming that we know much less than we think we do, even when we're armed with data and studies. Sometimes especially when we're armed with data and studies, because they give us a false sense of confidence. British neurologist John Hughlings Jackson once said, "It takes 50 years to get a wrong idea out of medicine, and 100 years a right one into medicine."

And this spreads far beyond economics. In his excellent book "The Half-Life of Facts," Sam Arbesman writes:

"Facts change all the time. Smoking has gone from doctor recommended to deadly ... We used to think that the Earth was the center of the universe, and our planet has since been demoted. I have no idea any longer whether red wine is good for me. My father, a dermatologist, told me about a multiple-choice exam he took in medical school that included the same question two years in a row. The answer choices remained exactly the same, but one year the answer was one choice and the next year it was a different one."

The takeaway here isn't a plea to ignore data, statistics and studies. But they have to be taken for what they are: Fallible and often incomplete. People get tripped up when they take one set of data or one study and put all of their weight behind it. "I'm investing in X because this study shows Y." Or, "I'm selling everything because this economic report shows trouble ahead." At best, data guides us in a certain direction, but investors always have to have a healthy appreciation for the unknown. We talk a lot about how bad analysts are at predicting the future, but it's really worse than that. We barely know what's happening right now, or even what happened in the past.

Rogoff and Reinhart wrote a book titled "This Time is Different," poking fun at what have been called "the four most dangerous words." I disagree. The four most dangerous in the English language words may be, "This study proves that ..."

(Morgan Housel has no position in any stocks mentioned. The Motley Fool recommends American International Group. The Motley Fool owns shares of American International Group.)

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Morgan Housel, a columnist at The Motley Fool, is a two-time winner, Best in Business award, Society of American Business Editors and Writers and Best in Business 2012, Columbia Journalism Review.


Previously:


Gold collapse: The start of something big?

BAD NEWS: EVERYONE IS RIGHT!

Twitter: The carnival barker of investing

Warning: Don't waste your capital being fooled by profit prophets

25 important things to remember as an investor

New paradigm for both drivers and car companies

Biases that make you a bad investor

Nine financial rules you should never forget

Gaining from financial destruction

How to read financial news

Housing: Partying like it's 1925

A rebuttal to student loan horror stories

CONGRATULATIONS: We just saved half a trillion dollars

End this crazy tax: It will boost the economy

Medicare: A dangerously good deal

Economic future looks bright

The Biggest Threat to Your Portfolio (It's Not What You Think)

Bond Market Bull Run dead at 30



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