January 20, 2018 | ‘This Time is Different’ and the Same Old Speculative Fever

Economist David McWilliams has a rare command of historical context, the independence to speak freely, and an Irish gift for storytelling.  His recent article: Four very expensive words ‘This time is different’, is worth reading.  Here are a few highlights:

There is a huge difference between speculating and investing. The speculator typically starts with a little money and hopes to make a lot, quickly. The investor, in contrast, starts with a lot of money and hopes to make a little, more slowly.

All boom-and-bust cycles tend to follow similar paths and are always, as now, underpinned initially by low interest rates and cheap credit. The most expensive four words of all are: “This time it’s different”…

As markets go ever higher and the gap between valuation and prices becomes more and more stretched, it would seem injudicious to ignore the repeated warnings from history and overlook our human capacity for individual and collective self-delusion.

Danielle Park January 20th, 2018

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