I've seen a lot in the markets in all my years -- the nightmare of '73-'74, which led to my barbituate phase (and my first divorce, but who's counting?); the joys of being at the ground floor when JWM was gearing up the boys at Solly (chronicled in my book, 'Liar's Poker'); the coke-fueled days riding the Nasdaq like a Thai hooker during the late '90s, then riding it down. Since I've made and lost fortunes and made them again, in markets like this I like to pass along my accumulated wisdom and historical perspective to the younguns on the desks today. I was cutting my teeth trading EM bonds when most of you were crapping yellow, so you should listen to me. Here are two not unrelated thoughts to put this week in a little perspective. The first comes from my boy JK Galbraith (don't get me started telling stories; God, I miss him). Might sound familiar to a few putting money to work today. The second is a more recent vintage; keep it in mind when your broker calls you saying it's time to buy.
The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. --John Kenneth Galbraith, "The Great Crash"
For my second Pearl o' W, please turn to Page 2
Earlier: What Strange New Beast Is This? Or How To Think About The Fed’s Term Facility Auction
The Washington, DC Hustle: How To Think About Yesterday’s Capitol Hill Hearings
How To Think About The Return of Nick Maounis