This book sounds interesting:
Like a pair of financial sleuths, Ms. Reinhart and her collaborator from Harvard, Kenneth S. Rogoff, have spent years investigating wreckage scattered across documents from nearly a millennium of economic crises and collapses. They have wandered the basements of rare-book libraries, riffled through monks’ yellowed journals and begged central banks worldwide for centuries-old debt records. And they have manually entered their findings, digit by digit, into one of the biggest spreadsheets you’ve ever seen.
Their handiwork is contained in their recent best seller, “This Time Is Different,” a quantitative reconstruction of hundreds of historical episodes in which perfectly smart people made perfectly disastrous decisions. It is a panoramic opus, both geographically and temporally, covering crises from 66 countries over the last 800 years.
I wish them well. But we can’t seem to learn from history, except (perhaps, every now and then, a little bit) for the history we ourselves experience personally. For example, many people such as my mother who went through the Great Depression pooh-poohed all the boom times that followed and refused to speculate even a little bit. It can be a double-edged sword for such individuals, though. For someone like my mother, it meant that they did not ride the wave and make much money during the go-go years, but it also meant they didn’t lose much when the downturn came.
For society as a whole, it’s perilous to not learn and understand economic history, but it seems to be our fate, no matter how many books are written and how many theories abound. Because who can tell which ones are correct? People would usually rather be seduced by the idea of the quick profit; they think that they will be able ride the wave and jump off at just the right time before the inevitable wipeout. The motivation for short time gain is huge, and hubris is rarely in short supply.
With the stock market lurching again, plenty of investors are nervous, and some are downright bearish. Then there’s Robert Prechter, the market forecaster and social theorist, who is in another league entirely.
Mr. Prechter is convinced that we have entered a market decline of staggering proportions — perhaps the biggest of the last 300 years.
In a series of phone conversations and e-mail exchanges last week, he said that no other forecaster was likely to accept his reasoning, which is based on his version of the Elliott Wave theory — a technical approach to market analysis that he embraces with evangelical fervor.
Right? Wrong? Who knows? He advises to get out of the market entirely and stay in cash. But for most people who got into the market at what turns out to have been the wrong times (and there turns out to have been a lot of those times), that would mean incurring a huge loss right now.
As for me, I get fatalistic about it and don’t do anything too rash either way. If the economy becomes that bad, I figure the vast majority of us will be in deep doo-doo and it doesn’t much matter what I’ve done to prepare, unless I’ve learned to become a survivalist and frontierswoman, and it’s a little late for that.