Do we learn from history?

When Jeremy Grantham was asked, “Do you think we will learn anything from this turmoil?”, he responded, “We will learn an enormous amount in the very short term, quite a bit in the medium term and absolutely nothing in the long term. That would be the historical precedent.”

We have short memories. We need to be reminded regularly of the history, as a protection against our own mistakes during the extremes.

#RidingTheRollerCoaster – 177

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Pillar two: History of financial markets

William Bernstein wrote a classic “Four Pillars of Investing”. It is a must read for any student of investments.

In the chapter “Introduction”, he writes that the second pillar of investing is knowledge of history. He writes:

… a study of previous manias and crashed will give you at least a fighting chance of recognising when asset prices have become absurdly expensive and risky and hewn they have become too depressed and cheap to pass up.

… the investor who is unaware of financial history is irretrievably handicapped.

Those who are interested in removing this handicap cannot ignore studying the history.

And this is what I have written in the book “Riding The Roller Coaster – Lessons from financial market cycles we repeatedly forget”:

In the beginning, all the events looked different. In spite of the apparent differences between the origins, as discussed above, there were too many common threads and parallels. It was hard to ignore the signals and still the world ignored ouches to ignore them. And that  confirms to what Bishop Desmond Tutu or Jeremy Grantham said. Remember the golden words of Sir John Templeton, “The four most dangerous words in investing are: ‘this time it’s different.'”

Ignore the history at your peril. Learn the lessons and remember those. If required, re-read the book.

#RidingTheRollerCoaster – 173

Do we learn anything from crisis?

Jeremy Grantham was asked whether “we will learn anything from this turmoil”. He said, “We will learn an enormous amount in the short term, quite a bit in the medium term and absolutely nothing in the long term. That would be historical precedent.”

The memory is short, we tend to forget the lessons.

Keep reading “Riding The Roller Coaster – Lessons from financial market cycles we repeatedly forget”

Reading the book would serve as a reminder to what happened. You do not have to go through the pains of a crisis all over again. The lessons can be learnt and remembered simply by re-reading the book.

#RidingTheRollerCoaster –

What we learn from crisis

When asked whether we will learn anything from this (2008) crisis, Jeremy Grantham answered: “We will learn an enormous amount in the short term, quite a bit in the medium term and absolutely nothing in the long term.”

 

#RidingTheRollerCoaster – 37