Sir John Marks Templeton was an American born British investor who was named by Money Magazine in 1999 as “arguably the greatest global stock picker of the century.” Born in 1912, he published his famous “16 Rules for Investment Success” in 1933. While all of them are good rules to follow, one quote has always stood out to me:
“The investor who says, “This time is different,” when in fact it’s virtually a repeat of an earlier situation, has uttered among the four most costly words in the annals of investing.”
This quote is found during the discussion portion of Rule 11, “Learn from your mistakes.” History is full of great lessons learned the hard way. Asking “How did this work out before?” is a good starting point when looking at an investment.
Which leads me to a very similar quote by George Santayana in 1906:
“Those who cannot remember the past are condemned to repeat it.”
Prime investment examples to look back on are:
– Tulip Bulb Mania of 1637 where speculators in the Netherlands ran up the price of tulip bulbs to astronomic heights.
– Dot-Com Bubble of 2000 where every internet company was a winner…until they weren’t.
It is interesting to compare those 2 prior opportunities to the current Bitcoin situation.
I don’t want to leave you with the impression that investing is a bad idea. Investing in the U.S. Stock Market over time has always produced positive returns. It is only when you look at shorter periods of time when you see losses.
Remember, putting today’s situations in historical context can help us to avoid future pitfalls.