On Human Nature, on Isaac Newton, and on Today's Mixed Picture

Well, if I've learned anything over the past 40 years doing what I do, it's that, at nearly very major turning point the majority of investors, and policymakers alike, tend to assume that the future is going to unfold essentially the same as the recent past.

As, alas, BCA analyst Davil Joshi pointed out in this morning’s chat,

“The winners of the old technology are never the winners of the new technology.”

His concern being that the market continues to, in his view, mistakenly bid up the companies that are essentially the winners of yesterday’s technology, that the true long-term winners of AI have yet to be discovered. 

Per Alan Watts (on human nature):

"We are driving a car, looking at the rear-vision mirror. The environment in which you believe yourself to exist is always a past one, it isn't the one you're actually in."

And that, in reality, waves and cycles are as inevitable in economies and markets as they are in nature:

“…there is no such manifestation as half a wave. We do not find in nature crests without troughs and troughs without crests.”

And that the longer the cycle, the more the crowd loses sight of this unalterable reality:

“The slower the wave goes the more difficult it is to see that the crest and the trough are inseparable.”

I.e.,

“Trough implies crest just as crest implies trough.”

Thus, call it human nature, recency bias, what have you, it's easy for markets to ultimately do what they do best.

I.e., the old Wall Street adage: