A Decade of Delusions: From Speculative Contagion to the Great Recession

Chapter 2

Techno Babble, Techno Bubble1

Source: © FactSet Research Systems.

The writing of the annual report is a special privilege for the undersigned. In addition to the opportunity it provides to communicate with a wonderful group of people, it also periodically induces me to step back from the fray and reflect on the nature of the causes of which the capital markets constitute merely the effect. Throughout, an atypical attitude toward risk and opportunity is advocated that may make the journey of wealth management less uncertain if not more productive. Much of what follows, as always, pays due homage to Mark Twain’s dictum: “History doesn’t repeat itself, but it rhymes.” More on that later.

Call it philosophical resonance. At some point in our professional lives, we come to the realization that we can’t be all things to all people, that we must choose sides. I had the early-career good fortune of being exposed to the writings of Benjamin Graham well before I was introduced to mainstream thinking. That learning experience proved to be an epiphany. The logic and integrity of Graham’s thinking enthralled me. Just as naturally as dessert follows the main course, I later came to embrace the teachings of Warren Buffett, Graham’s protégé. Buffett is simply Graham raised to the second power. Such singular focus likewise means there is little room in my intellectual library for the ...