A Market History Lesson From Old-Time 2000
While reading British economist John Kay’s blog I came across an old post that revisited the mindset and experiences of the dotcom bubble, including a hilarious tale you can find here under the April 19, 2000 heading. This reminds us of the popular delusions of the time and how easily many believed them.
What struck me was that in Robert Shiller’s recent book Animal Spirits he talks about how card games of choice over the last 60-70 years have shifted from bridge (a co-operative game) to poker (a competitive zero-sum game) and economic choices seem to reflect this. As John Kay illustrates in an entertaining way, current economic choices don’t just reflect zero-sum competitiveness. They are also driven by a desire and belief in getting the rewards before the work.
I don’t know if the late 90s was when this really become a dominant idea (the 80s had quite a few financial tricks too) but we know all too well that it didn’t go anywhere after 2000. Currently it’s a bit muted but I’m unsure whether it will continue to fade away or grow again. Unfortunately those who follow this idea are a danger to everyone in the markets, not just themselves. I don’t believe the stock market is a casino, but apparently many others still do.
The easiest way to avoid their damage is to play a different game by investing for the long term. The best way is to get ahead of their game and be the one they lose their money to, but that depends on many random factors in addition to the things we know.