“Ever since the markets blew up in 2008 many investment practitioners have been engaged in something akin to a whodunit. Just how did we get into this mess ? This book is an answer, of sorts. Everybody did it. We all played a part.
“As Lord Overstone once remarked, no warning can save people determined to grow suddenly rich. In the run-up to the Global Financial Crisis accident-prone bankers were only doing what they always do: gambling, badly, it transpired, with other people’s money. There was no shortage of irrational behaviour by property speculators, or homeowners, as they are sometimes called.
“But the rot in the system runs deep. After the collapse of Lehman Brothers in September 2008 most banks did not fail, because the central bankers of the world did not allow them to. Be careful what you wish for. The financial markets are now in thrall to these unelected monetary technocrats. The extraordinary monetary policies that central bankers are now pursuing are destabilising financial markets and suppressing their natural price signals.”
- From the Introduction to Investing through the Looking Glass: a rational guide to irrational financial markets.
If you wanted to design an environment for investing that was most maddening for the greatest number of people, the chances are that you couldn’t improve on the state of modern technology and financial media as at early 2018. Buy and sell and switch between stocks and funds effortlessly online at negligible cost. Monitor the prices of those stocks and funds online in real time. Immerse yourself in a news environment online in which limitless commentary masterfully confects a heightened emotional response to what would otherwise pass as noise. Lather, rinse, repeat. And then wonder why your commitment to investing for the long term never quite survives first contact with the enemy.
