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This article by Morgan Housel brings up SO many great points about investing. So much of how we view the markets and investing is a result of our formative years in life and investing.
He brought up a lot of good points about the people who experienced the .com bubble and great recession being extra cautious/negative on the market because of their experience.
In fact, famous VC investor Marc Andresson who’s know for his “software is eating the world” quote said this:
"Two years ago Marc Andreessen said that tech stocks have been undervalued for most of the last 15 years. It partly explains why they’ve produced great returns. The cause of undervaluation, he explained, was the mental scars left by the dot-com implosion in 2000.
“If you live through one of these scarring crashes, you get psychologically marked,” he said. It scarred investors, founders, journalists, regulators, everyone.
Investor Tren Griffin wrote:
I have a lot of muscle memory that resulted from the Internet bubble. There is no way you can fully convey in words the experience being in the lead car as an investor in that roller coaster. Looking at the cycle after the fact is nothing like looking ahead and not knowing what will happen next. The experience still impacts the way I think and act."
"This holds true across asset classes. Ten-year Treasury bonds lost almost half their value from 1973 to 1981, adjusted for inflation. Those who lived through these blows invested considerably less of their assets in fixed-income products than those who avoided them due to the luck of their birth year.
Back to my generation, the Millennials, who have never experienced inflation: When we invest on our own, we put 59% of our assets in cash and bonds, and 28% in stocks, according to UBS Wealth Management. And of course we do: Many of us started making money in the teeth of the Great Recession and the largest bear market in generations, which also happened to be the period when bonds not only preserved but grew wealth as interest rates fell to 0%. That’s our history. That’s what we know. And what we know is more persuasive than what we read."
I personally was not investing in 99 - 2000 or even in 08-09 so all I can do is read about it. What’s so interesting to me is how some of the more experienced investors here who invested through those extremely challenging times are able to beat the human desire to shy away from investing due to fear of the same thing happen again.
I’m sure I’ll deal with a similar challenging period at some point in my investing career and I hope to handle it with the same confidence/discipline as many of you.
https://www.collaborativefund.com/blog/you-have-to-live-it-t…