Context and Experience

Time Tells The Story

The latest issue of Fortune Magazine contains an interesting interview with discount broker king Charles Schwab. Schwab strikes an optimistic note to the current crisis stating that in 1979 BusinessWeek ran a cover story titled the “The Death of Equities.” Sure, one could argue not much has changed in light of the current circumstances. Yet, that would negate the explosive growth of the stock market. Consider for instance that the Dow Jones Average was just over 780 points in August of 1982. People ,it appears, have short memories and lose context.

What is also missing is experience. Many current investors due to their age did not have a stake in the market of the 1970’s. Similarly, when one talks about the 1930’s as they do now one has to be especially careful as well. Unless, you have lived through the time period you have to discount for a lack of first person perspective. Structured Analogies , which is a analytical method for highlighting similar situations can be very usefull, yet should complement any first person narrative when possible. In a recent podcast from the Long Now Foundation , scenario planner Peter Schwartz noted that as people live longer they are able to impart a greater insight into current events. They have experienced more events are perhaps able to draw greater inferences from them. For example Irving Kahn, who is 102, worked on the floor of the stock exchange in the Crash of 1929 here gives his take on the current crisis.

Many people too often are tempted as they were in the early 2000’s to declare that “This time is different.” It is the refrain offered today declaring the greatest crisis since the 1930’s. Perhaps. We are not there yet however. Keep in mind the Great Depression was highlighted by 25% unemployment and did not go below the 10% level until 1941. Some project we will be lucky to miss 10% unemployment next year. Even still these numbers don’t match.

The best exhaustive research used to create predictive intelligence will be that which incorporates both secondary sources and interviews with first person individuals.

See how many analogies you can draw from this NYTimes Article “Dark Days of Wall Street.”