Vol 3, Issue 10. Quarter 2 – 2026.

Golda Meir was the first female Prime Minister of Israel in the late 1960’s. She is famous for many things including the quote, “Don’t be so humble, you’re not that great.” This is a common call out when someone is pretending to be humble, when in truth what they are doing is trying to show you how smart they are. When someone tells you about their “little idea” they often mention that this is the correct answer in their “humble” opinion. But the truth is that they are not really being humble at all. They do mean to show you how smart they are, but they want to do it in a way that does not motivate you to call them out for bragging. What they really mean, is “look at me – I am a genius.” What Meir was saying was something like “you don’t have to hide your brilliance – because you don’t really have any,” or “the only one who thinks your ideas are brilliant is you.”

This thought came to mind when I ran across a new book from my favorite publishing company in the personal finance space – Harriman House. The book title is “The Humble Investor” by Daniel Rasmussen.  I am not interested in reading or writing another book review because you can get that anywhere, but there is a central argument implicit in the book that bears repeating. It is not the argument that the author meant to make, but that’s what makes it all the more interesting.

The book begins with a fairly simple observation – that you cannot consistently time or predict equity prices if you look more than a few minutes into the future. This is easily explained by the idea that if a market is highly (though not necessarily perfectly) efficient, all available information has already been processed by market participants and is incorporated in the stock price. The future changes will be driven by new information or surprises. This is why predicting the future price is impossible. It will be based on information that doesn’t exist yet. This has often (and ridiculously) been restated as “market prices are always right”. The reason that I say this is ridiculous is that there is no such thing as a “right price”. There is simply a price. It reflects all available information, but it also reflects the aggregate behavior of buyers and sellers in place at that moment. If a few thousand people decide that Game Stop stock is worth $300 a share that day, and they are willing to put their money behind that belief, then for that moment, it is worth $300. The fact that “the fundamentals” do not support that valuation does not mean that the price is wrong. However, it does STRONGLY suggest that it will not stay at that level very long.

The rather standard criticism of the idea of market efficiency is that stories like the one around Game Stock prove that markets are NOT efficient. To that narrative I say “Poppycock” which is a polite way of saying “Bullshit!” (I just wrote “Poppycock” to avoid complaints about using foul language like the word “Bullshit!”) As far as I am concerned, how buyers and sellers interpret company-specific information is part of the information set. It may make you feel better by saying that the market is “wrong” and you are “right” but that doesn’t change the brute fact that the price is what it is, and the market as a system has determined that level – not the fundamentals, not “the right answer”, and certainly not you.

Back to this “Humble” little book. The author argues that while markets are not really efficient, as evidenced by things like price run-ups on meme stocks, there are metrics that can be used to tell you which types of stocks will “perform well” in the near future. For example, he argues that you can look at spreads between government bonds, and relatively low grade corporate bonds to get a sense of what is going on. When this spread is low the debt market is encouraging speculative borrowing, and stocks in profitable small firms will do well. “Small value, oil and copper return massively more when spreads are falling than when they are rising – with oil and copper barely positive during periods when spreads are rising.” On the other hand “Tighter spreads meaning cheaper costs of borrowing are associated with trending equities.”

The author goes on to make a few more observations of a similar nature based on things like volatility levels, and inflation rates. The bottom line is that he ends up with a few metrics that will allow you to beat the market if you move money from less attractive sectors to more attractive ones when key variables hit his selected high or low values. Apparently, he is working on creating an algorithm that will take these things into account to produce a recipe that will beat the market, and all you will have to do is buy his book, or pay him a small fee.

Here is the catch. Of the thousand or so Mutual Fund managers in the US, the number of them who have someone on staff that has made these same observations is roughly 999. If you stare at columns of numbers long enough you to will see some patterns, and it’s not hard to convince yourself that you are special – meaning that no one sees the pattern but you. The simple fact of the matter is that simple “predictors” like these are already embedded in algorithms all over the place, and if they worked, every manager would beat the market. The fact that you convince yourself that you are a genius because you see a pattern that thousands of other folks have been looking at for 100 years or so, doesn’t make you brilliant, and it sure as hell doesn’t make you “Humble.” Please keep that in mind.