Panic, Prosperity, and Progress: Five Centuries of History and the Markets

CHAPTER 25

History in the Making

Having surveyed so much of history over the span of five centuries, can any conclusions be drawn? Can any generalities be divined from these historical lessons that can help inform future decisions? Although answering either of those questions to a certainty would be impossible, there are some broad themes that wind their way through the 24 chapters that precede these closing remarks.

■ The Ties That Bind

Although the great variety of nations, cultures, and events prevent any single theme from binding together all of these episodes, there are certainly some common themes that can be used to gather some of them together into similar groupings:

• How obvious things seem in hindsight. As the old saying goes, hindsight is 20/20, and upon reading tales of the savings-and-loan (S&L) fiasco and the Internet bubble, one can be forgiven by puzzling over how the public and its leadership could have been so foolhardy. After all, allowing parties to buy S&Ls with federally insured money and in turn permit them to invest in anything they pleased seems like lunacy today, but that’s what took place not so very long ago. Likewise, any price chart of equity markets using any fundamental metric would have illustrated how completely insane anyone would have needed to be in order to buy Internet stocks in the beginning of 2000, but tens of millions did so anyway. The same could be said for tulip bulbs, South Sea shares, or Japanese real estate. Only after the bubble ...