“For practical purposes, the financial memory should be assumed to last, at a maximum, no more than 20 years. This is normally the time it takes for the recollection of one disaster to be erased and for some variant on previous dementia to come forward to capture the financial mind. It is also the time generally required for a new generation to enter the scene, impressed, as had been its predecessors, with its own innovative genius.” - J K. Galbraith
Financial memory is an often-overlooked important issue. Think of those who started their career after the GFC. If the professional started in finance at 22, he is now 37 and has never seen a pre-QE world. If you started your career at 25, you are now entering your 40's without ever having seen a large bear market. Many quants create back-tests that are much shorter than 15 years. It is no wonder that leverage is a king, and many investors want to continue holding risky assets and buying on dips.
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