Tuesday, October 28, 2014
The need for history with economics and finance
That men do not learn very much from the lessons of history is the most important of all lessons of history.
Huxley is always good for a quote, but this is one that has stuck with me for years and has had some of greatest influence on my thinking. Markets go through cycles and repeatable events. The surprise is that we are always being surprised by events that have precedence. Credit cycles - we have had that. Bubbles - we have had those. Bank runs - we have seen it. Government intervention - normal. Central bank mistakes - check.
We may still be surprised by the intensity of some events and the structure of markets are always changing, but if we have not studied the past and prepared for these events, it is our own fault.