Newton's Financial Misadventures in the South Sea Bubble
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Newton's Financial Misadventures in the South Sea Bubble
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Re: Newton's Financial Misadventures in the South Sea Bubble
#2https://en.wikipedia.org/wiki/Dunning–Kruger_effect
Newton got hit hard by this I think.
I’m also always reminded of Rainman trying to predict the Wonder Wheel in Vegas and not realizing it plays by very different rules than blackjack, where you can count the cards and make predictions.
Re: Newton's Financial Misadventures in the South Sea Bubble
#3https://en.wikipedia.org/wiki/Dunning–Kruger_effect Newton got hit hard by this I think. I’m also always reminded of Rainman trying to predict the Wonder Wheel in Vegas and not realizing it plays by very different rules than blackjack, where you can count the cards and make predictions.
Not sure it’s a Dunning-Kruger Effect. Investment bubbles drag people in. He thought it was overvalued when he doubled his money and got out. He was probably right but the market stayed irrational. Looks like he was buying the dips on the way down too.
“Tales abound of how he invested early, and cashed out with 100% profits as market valuations went to what seemed to him unjustified levels. However, as prices continued to advance, he supposedly invested again at the peak and lost most of his fortune in the crash that followed”
Re: Newton's Financial Misadventures in the South Sea Bubble
#4the bitcoin of his time.
Re: Newton's Financial Misadventures in the South Sea Bubble
#5https://en.wikipedia.org/wiki/Dunning–Kruger_effect Newton got hit hard by this I think. I’m also always reminded of Rainman trying to predict the Wonder Wheel in Vegas and not realizing it plays by very different rules than blackjack, where you can count the cards and make predictions.
The first rule of the Dunning–Kruger club is that you don't know you're in the Dunning–Kruger club. Depending on the topic, even the most intelligent of us can get tangled up
Re: Newton's Financial Misadventures in the South Sea Bubble
#6The awesome folks at Extra Credit History did a great series on this: https://www.youtube.com/watch?v=k1kndKWJKB8
Re: Newton's Financial Misadventures in the South Sea Bubble
#7the bitcoin of his time.
Also the "tech" of his time.
Re: Newton's Financial Misadventures in the South Sea Bubble
#8https://en.wikipedia.org/wiki/Dunning–Kruger_effect Newton got hit hard by this I think. I’m also always reminded of Rainman trying to predict the Wonder Wheel in Vegas and not realizing it plays by very different rules than blackjack, where you can count the cards and make predictions.
Not sure it’s a Dunning-Kruger Effect. Investment bubbles drag people in. He thought it was overvalued when he doubled his money and got out. He was probably right but the market stayed irrational. Looks like he was buying the dips on the way down too. “Tales abound of how he invested early, and cashed out with 100% profits as market valuations went to what seemed to him unjustified levels. However, as prices continu…
This is a lesson to not assume you're good at investing if otherwise intelligent.
The Intelligent Investor, by Graham, brings up the archetypical example of a doctor/dentist and his financial misadventures. His (or her) disadvantage is that they're obviously intelligent which pushes them to be overconfident in a field in which they have zero experience. Overconfidence breeds poor risk management and eventual trouble.
Re: Newton's Financial Misadventures in the South Sea Bubble
#9The awesome folks at Extra Credit History did a great series on this: https://www.youtube.com/watch?v=k1kndKWJKB8
As a fan of financial history -- and I know that's an odd thing to be interested in -- this is the craziest story I've ever heard.
Re: Newton's Financial Misadventures in the South Sea Bubble
#10The awesome folks at Extra Credit History did a great series on this: https://www.youtube.com/watch?v=k1kndKWJKB8
As a fan of financial history -- and I know that's an odd thing to be interested in -- this is the craziest story I've ever heard.
Financial/economic history is incredibly important if one wants to invest successfully. Much of the things we see in the markets had happened before, but not necessarily in our lifetimes. For example there were entire decades in the US history when bonds easily outperformed stocks, yet because of the last decade your typical retail investor thinks bonds are for people that don't want good long term gains.
"How The Economic Machine Works" https://youtu.be/PHe0bXAIuk0