I post this largely for the sake of my own reference, but hopefully others will find it edifying. This is from Robert Rubin's memoir In An Uncertain World:
Even Sir Isaac Newton, the great English mathmetician and physicist of the seventeenth century, was a majori investor in the most extreme financial excess of his day, which became known as the South Sea Bubble. The South Sea Bubble grew out of a scheme to convert British government obligations into common stock in a company with a theoretical monopoly on British trade with South America. Practical obstacles abounded: the company's "officers" had never been to South America; they had scant ships or supplies; and there was no reason to believe the King of Spain would allow Britain to trade with his coloines. Thousands who invested were destroyed financially.
That episode typifies the psychology of market excess. You're sitting on the sidelines, telling the people around you all the reasons why you think the market may be overvalued. And they're all looking at you, saying, "There's a new reality, and you don't get it. You don't understand how much the world has changed -- which is why people like you always fall by the wayside."
That episode typifies the psychology of market excess. You're sitting on the sidelines, telling the people around you all the reasons why you think the market may be overvalued. And they're all looking at you, saying, "There's a new reality, and you don't get it. You don't understand how much the world has changed -- which is why people like you always fall by the wayside."
Well put, I think. I used to tell friends that I thought their daytrading speculation in the 90's was silly and inadvised. They made lots of money at first; I don't know how it ended. I do know that they never thanked me for my advice. Next time, I'll keep my mouth shut.
Real estate has been very strong for a long time now, but occasionally there are still excesses. If you're thinking of investing in real estate, be mindful of this story; make sure it's a wise investment.
The DC real estate market, I believe, is due for a correction.
Real estate has been very strong for a long time now, but occasionally there are still excesses. If you're thinking of investing in real estate, be mindful of this story; make sure it's a wise investment.
The DC real estate market, I believe, is due for a correction.
This article was posted by TRE and was originally featured here.
