The Four Pillars of Investing: History of Investing
Today we’ll continue our series on looking at The Four Pillars of Investing by William Bernstein, and reviews by J.D. Roth at Get Rich Slowly. Last time, we looked at how important it is to understand the theory of investing. Today is a look at the importance of the history of investing.
Pillar Two: Know the History of Investing
George Santayana said, “Those who cannot learn from history are doomed to repeat it.”
This is also true of investing. One thing that Bernstein does in his book is look at the history of investing, so that you can get a better idea of how investing works, and what kinds of debacles (and booms) have been seen in the past.
The financial markets have been around for centuries. Looking at the follies and triumphs of the past can help us gain a better understanding of where we are right now — and where we are headed in the future. Bernstein offers a tour of some of the events in markets past that can teach us lessons today.
It is true that such events as the South Sea Bubble and the Tulip Bulb Bubble are both fine examples of what can happen when speculation gets out of control, and investors become too enthusiastic. We saw similar problems with the Tech Bubble and, quite recently and devastatingly, with the Housing Market Bubble.
Investors who are well versed in history know that hysteria is not something to base a long-term investment strategy upon. Learn the history of investing. Study those that earn and those that lose. And make better investing decisions because of it.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.
Tags: stock market, investing, investing blog, investment strategy,
housing market bubble, investments, history investing
