Saturday, November 18, 2023

Quote of the Day: Human Nature "Doesn't Change"

Peter Boockvar and I have seen a few rodeos in our day... Listening to an interview with him recorded yesterday; I couldn't agree more with the following:

"No doubt that experience helps in this business. 2021 when you had all the meme stock craze, I had the memories of the late-90s and I knew that this was just a repeat of that. And I didn’t know the extent to which the markets were going to take it, but I knew this is with same exact mentality, and I knew this was going to end badly as it did after the late-90s.
You just don’t know when and from what level, but now for those people that did not watch the markets in the late-90s it was their first experience. And that’s why it got crazy, because most people that were driving the craziness weren't around in the craziness in the late-90s and didn’t realize that if there’s one thing that doesn’t change, it's human nature, and human nature just repeats the same things over and over again in the financial markets.
This is the one industry where people don’t really learn from history, because the new generation doesn’t do their their work on history, and they think that something new has never been seen before, and it's the greatest thing since sliced bread, even though the veterans in the market say yeah it's great, but, you know, I've seen something like this before."


It, sadly, can be even worse than that; as I've witnessed, firsthand, veteran professionals, and investors, who actually lived through the likes of the late-90s convince themselves that eerily similar dynamics in the present day will not ultimately end in the same fashion... Apparently they've convinced themselves that human nature does indeed change (proving, I suppose, that it indeed doesn't), and that this time is different.

Now, you always hear me say that we have to remain open to all possibilities, and we do, but, my oh my!, we simply can't deny the fact that, at a minimum, history indeed instructs us as to when the risk is dangerously high, and, thus, in our case, inspires us to accommodate for it in our allocations.

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