Quote for the Week
One of the important factors behind the fluctuation between bull and bear markets, between booms and crashes and bubbles, is that investor memory has to fail us – and fail universally – in order for the extremes to be reached. John Kenneth Galbraith said, “Contributing to euphoria are two further factors little noted in our time or past times. The first is the extreme brevity of the financial memory…” If people had good memories, if they could call to mind and derive the significance of the events of the past, they would be less likely to repeat or less likely to go to the same extremes. But most people do not have the ability to bear these things in mind. Some of them happened too long ago.
For example, 1929 was repeated in 2007-2008, but by definition you would have to have been born 100 years earlier to be able to make use of that lesson. Most people who were around in 2008 were not born in 1908.
Memory – and the resulting prudence – always comes out the loser when pitted against greed. There is very little man is more likely to believe than that which will make him rich if true. So the prevalence of greed, self-interest, and wishful thinking has great power to overcome memory and caution. As I said before, what the wise man does in the beginning, the fool does in the end. These trends are always taken to excess. The investors who are not aware of them always pay the price. — Howard Marks (source)
From the Archives
Last Call
- The Coin that Landed Sideways – OSVerse
- 50 Facts From 1H 2025 – Idea Farm
- The Deception of a Good Outcome – Safal Niveshak
- Everyone Has a Process – Mind of Mojo
- The 60/40 Portfolio: A 150-Year Markets Stress Test – Morningstar
- When Private Funds Are Publicly Traded – Verdad
- Equity Market Focus: Interrogating the Historical Data (pdf) – AQR
- What the New Tax Laws Mean for Your Retirement Plan – C. Benz
- Lindy’s Law – Humble Dollar
- Notes to Myself – S. Godin