Experience as Illusion
Posted on November 19, 2012
Addicted investors experience a boom-to-bust cycle much like a romance that ends badly. And like such romances, the first is always the most passionate. For me it was the late 1960s, although I was warned almost precisely at the top upon reading “Adam Smith’s” The Money Game in June 1968. But like a naive youth gradually losing his girlfriend to an unknown rival, I kept dating her for another year despite surprising and painful consequences. Fortunately, we broke-up while I still had enough money to finance a graduate education that landed me on Wall Street in the early 1970s.
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But I would never again be so trustful of the market. I had learned my lesson. Or had I? As John Brooks put it in The Go-Go Years when commenting upon the message of Proust’s great book, “man’s apparent capacity to learn from experience is an illusion.” We fall in love again. The cycle repeats as evidenced by the dot-com period of the 1990s or the junk bond takeover era of the 1980s. Read more…
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