In his recent interview with Sean Delaney on the What Got You There podcast, Michael Mauboussin discusses behavioral economics and makes the point that human nature, as it relates to investing, is unlikely to change anytime soon. Here’s an excerpt from the interview:
If you go back and circle around about behavioral stuff, it’s unlikely that human nature is going to change anytime soon even with our understanding of all these bahavioral issues. People are people. You see it everyday. Those will be persistent.
Ben Graham, who was obviously the father of security analysis, had this metaphor of Mr Market to think about markets. In a sense what he was trying to do was anthropomorphize these concepts of markets as people and having these different sorts for moods. Those sets of ideas will be around for a long time.
People will collectively become too optimistic or too pessimistic, collectively. That’s always been true and for the foreseeable future will also be true.
You can listen to the entire interview here:
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