Give me the Gold Instead

From Ezra Klein comes this:

John Meriwether’s first hedge fund, Long-Term Capital Management, failed in 1998, and almost brought Wall Street down with it. His second hedge fund, JWM Partners, closed this summer. Now he’s setting up a third hedge fund, based largely on the same strategy that underpinned the first two. And it appears that people mean to invest in it.

Meriwether, in other words, is proof that markets are not efficient, and investors are frequently stupid, and frequently dazzled by slick sales pitches. Indeed, the best analysis of this tendency came from an unpublished paper by Larry Summers attacking the very concept of all-knowing, all-seeing markets. “There are idiots,” his paper began. “Look around.” Meriwether’s comparative advantage, it seems, is in knowing exactly where to look.

Well, there’s always gold.