STREET DOGS: Investors shape experiences
As investors we’re all shaped by our experiences
From Ben Carlson at A Wealth of Common Sense: Benoit Mandelbrot in his book The (mis)Behavior of Markets talks about the emotional scars left on those who lived through the Great Depression: in the 1960s, some old-timers on Wall Street — the men who remembered the trauma of the 1929 crash and the Great Depression — gave me a warning: "When we fade from this business, something will be lost. That is the memory of 1929." Because of that personal recollection, they said, they acted with more caution than they otherwise might. Collectively, their generation provided an inbuilt brake on the wildest forms of speculation, an insurance policy against financial excess and consequent catastrophe. Their memories provided a practical form of long-term dependence in the financial markets. Is it any wonder that in 1987, when most of those men were gone and their wisdom forgotten, the market encountered its first crash in nearly 60 years? Or that, two decades later, we would see the biggest bull m...
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