Why Did So Few People See The Crash Coming?

In the Spectator this week I've been writing about the relatively few people who managed to get the markets right. John Paulson famously got the US housing market right, and a small number of London hedge funds made some good calls, yielding big profits. But by and large very few people in the markets saw this catastrophe coming down the tracks. Of course, most fund managers have to stay fully invested because that is their mandate. And plenty of private investors, I suspect, had become very suspicious: I sold most of my portfolio of shares in 2005, and I'm sure I wasn't alone. But the hedge funds and investment banks failed spectacularly - and they may well never recover from that.