STREET DOGS: Relying on what happened in the past is not helpful
The best opportunities exist when novel events render past analogies obsolete
One of the reasons so many investors have been paralysed by fear during this downturn is that they have no way of thinking other than by analogy, and there are no analogies to draw on with respect to how to invest through a pandemic and government lockdown, so they have defaulted to one of two positions — both flawed. Either they say that because this event is completely unprecedented, the amount of uncertainty is so high that no reasonable basis for forming any assessment on the outlook exists; or they default to comparing the downturn to the GFC [global financial crisis] or even the Great Depression, because — well — um — stocks and the economy went down a lot then too. ..