Your job isn't to make headlines or talk about what might happen; it's to make bets on what will happen
Global head of research at Deutsche Bank, David Folkerts-Landau spoke to Bloomberg and said:
- To stay here [at zero], I believe, would be a mistake of historical proportions.
- They should have done it [raised interest rates] already.
- You may think that is an arrogant statement, but remember central banks make mistakes. If I had told you in 2003 that Greenspan was wrong, you would have said that was an arrogant statement, but he was wrong. If you go back to 1925 just when we're back on the gold standard, a huge mistake.
- So we shouldn't be afraid to say central banks make mistakes and I think this has been a fundamental mistake. They should have gone significantly before to remove that uncertainty, to allow Capex to develop, and to just take that big uncertainty out of the system.
OK, got that? Historical.
So, you might be wondering why this is in the education section. Here's why:
If you are Global Head of Research at a ginormous financial institution its part of the job to make sweeping statements of historical importance. Perhaps the Fed is making a mistake, perhaps David Folkerts-Landau is blowing smoke to get Deutsche Bank some free press.
If you're not Global Head of Research at a ginormous financial institution, you might be a trader. If so, part of the job is figuring out what the Fed (and others) WILL (or are most likely to) do, not what you think they SHOULD do.
Will you always get it right? Nope. I can give you too many examples from my own experience of not getting it right. And there will be many, many more 'not getting it rights' to come.
As a trader, saying THEY were wrong, not YOU (i.e. ME) is an excuse, a slippery slope that won't be doing yourself any favours at all.
