History's Seductive BeliefsA seductive belief that exists in almost every field is that things will keep operating like they always have. It’s an almost necessary belief in a world where you have to base a prediction off something.
But as Stanford professor Scott Sagan says, “things that have never happened before happen all the time.”
All the time.
In fact in most fields – especially business and investing – the most important events that changed everything and determined the majority of future outcomes are things that had never happened until they did.
The most important economic events of the last century are probably the Great Depression, World War II, the 40-year collapse in interest rates, and globalization. And while each had analogous ancestors, anyone predicting what those events eventually did to the world could be brushed aside by those who pointed out that, say, negative interest rates had never happened before. A nationwide housing bubble and bust had never happened before. A weapon like the nuclear bomb that could deter future wars had never happened before.
Then all those things happened. And they totally changed the world.
All history is the study of what’s changed, but it’s often used as a guide to the future. The irony is overlooked because the idea that if we gather enough data and read enough books we’ll acquire a map of the future is so seductive – it’s so simple, and makes you feel great.
That will never change.
Sep 21, 2021 by Morgan Housel
https://www.collaborativefund.com/blog/ ... e-beliefs/