Once upon a time, in a land far, far away, there lived an old wizard named Greenspan. Great and mysterious power had he; love and fear he inspired in equal measure. His name was known throughout the land.

This great Greenspan had strange habits. He would slumber in his bathtub for hours at a stretch, dreaming of scrap metal and interest rates and other alchemical subjects. He hid behind enormous, uncomely glasses, so that his visage might be obscured. His speech was magical too. His words were like flying insects—right there before you, plain as day—but if you tried to truly grasp them with your mind, their substance disappeared and you found yourself with only questions. These charmed words seldom organized themselves into rational sentences. They were more like riddles, or nonsense, or spells. His deceptiveness should have been a clue and a warning, but it went unheeded.

Amid the carefully choreographed political conventions last month, there was a spontaneous chant that will be familiar to anyone who watched the Republican festivities: 

“Drill, baby, drill!  Drill, baby, drill!  Drill, baby, drill!”

Occasionally, one gets it right. In my market comment last month ("Too Late to the Oil Party? Consider an Alternative"), I remarked:

Though I am a long-term bull on energy, oil has already more than tripled in the past four years. In my view, after this move, the probability of major price corrections and volatility is currently very high.

One of the best market proverbs is this: "In the short term the market is a voting machine, in the long term it is a weighing machine."

This line is generally attributed to the legendary Benjamin Graham; occasionally it is attributed to his acolyte, an obscure investor by the last name of Buffett. Regardless of who is actually the source, there is a great deal of wisdom in this simple saying. It clearly shows that the fundamental insights of what is now called behavioral economics have been understood by market players for a very long time. Fads, fashions, and the herding instinct can lead to large disparities, which are exactly what a long-term investor should be looking for.