Extrapolating The Recent Past Can Be Hazardous To Your Wealth
“Those who cannot remember the past are condemned to repeat it,” remarked George Santayana over 100 years ago. These words, as strung together in this sequence, certainly sound good. But how to render them to actionable advice is less certain.
George Santayana – purveyor of eminently quotable wise words by the wagon-load, but what shall one do with them in practice? [PT]
Aren’t some facets of the past – like the floppy disk – not worth remembering? And aren’t others – like a first taste of romance – worth repeating… if only it were possible?
Where investing is concerned, remembering the past – and discerning what to make of it – can actually be a handicap. Where does the past begin? How does it influence the future? How does one invest one’s capital accordingly?
These are today’s questions. What follows, with purpose and intent, is an attempt to scratch out an answer. Where to begin?
Many investment gurus in the early 1980s were predicting the future while projecting the past. After a decade of raging price inflation, the popular dogma was to pack one’s portfolio with gold coins, fine art, and antiques. This was the proven, surefire way to preserve hard earned wealth.
The United States, remember, was just a year or two away from going full Weimar Republic circa 1921-23. The dollar was going to quickly turn to hyper-inflationary ash, like conifer trees in a California wildfire. Everyone just knew it. You could darn near count down the days.
Right On The Money
Conventional wisdom, when it comes to the economy, markets, and investing, eventually leads to trouble. While everyone is busy watching the status quo unfold with Swiss watch like precision, the conditions that first brought this state of affairs to fruition subtly changes. Yet almost no one takes notice.
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