"I admit to not understanding it"

Fri 26 Jan 2018

By Sam Lees

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Market commentary

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climb mountainThe pages that follow tell of the greatest cycle of speculative boom and collapse in modern times. There is merit in keeping alive the memory of those days. (What will) prevent these recurrent outbreaks and their aftermath… is the recollection of how, on some past occasion, illusion replaced reality and people got rimmed.
The Great Crash 1929, by John Kenneth Galbraith, 1954.
 
Success breeds a disregard of the possibility of failure... A fundamental characteristic of our economy is that the financial system swings between robustness and fragility.
Hyman Minsky, 1974.
 
Biologists know that studying disease helps to understand the healthy body. Physicists collide high energy particles to understand ordinary matter. Meteorologists study hurricanes to forecast local weather. And economists? They are a curiously incurious lot… Financial economics, as a discipline, is where chemistry was in the 16th century; a messy compendium of proven know-how, misty folk wisdom, unexamined assumptions and grandiose speculation.
The Mis-Behaviour of Markets, Benoit Mandelbrot, 2004.
 
We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping. I admit to not understanding it.
Dr Richard Thaler, behavioural economist, Nobel Prize winner 2017
 
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