What’s Your Baseline?

I spoke at an excellent conference recently and was on a panel there with two big-time economists.  While I was sitting on the dias listening to my “colleagues,” I couldn’t help thinking about this old gem from Sesame Street.

And I was the “thing” that didn’t belong. 

That said, I was a bit surprised that we had so many areas of substantial agreement because our starting points were pretty different.  Economists look at the investment world somewhat differently from the rest of us.  They come at things from a different place.  Plus, neither of them was American, making our outlooks even less inherently consistent.

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Framing

InvestmentABCs1According to the Major League Baseball Rulebook, Rule 2.00:

“The strike zone is that area over home plate, the upper limit of which is a horizontal line at the midpoint between the top of the shoulders and the top of the uniform pants, and the lower level is a line at the hollow beneath the kneecap. The strike zone shall be determined from the batter’s stance as the batter is prepared to swing at a pitched ball.”

But what looks at least reasonably clear on paper is anything but in practice.  Indeed, far from every strike called meets the above criteria (not that this is news to any baseball fan). This reality is based — in no small measure — upon how each pitch is “framed” by the catcher. Continue reading