Why smart investors repeatedly make stupid decisions
There are few certainties in life, but one that is fairly cemented in the workings of the stock market is that people will speculate. You must speculate to accumulate; the saying goes. This is inherently true; the nucleus of every new venture, product, or company is built upon an idea, some conviction and someone who asks “How hard can it be?”. The confirmatory evidence usually comes later down the line.
You may define speculation as “the forming of a theory or conjecture without firm evidence”. I am reminded of Henry Ford’s quote about what would happen if he asked the public what they wanted in the early 1900s. They’d want faster horses. Doing something that’s never been done before requires a little bit of flying blind. We only tend to remember the creations that thrived, and easily forget the neverending list of failures that also included an idea, some conviction, and someone who asked “How hard can it be?”. That’s just the way it goes, and this is my way of saying that speculati…