David Rosenberg Illustrates The Most Dangerous Thing Investors Can Do
In the latest Breakfast with Dave, Gluskin Sheff's David Rosenberg writes "the most dangerous thing anyone can do is extrapolate the most recent experience, as enduring as it may seem, into the future."
People, he says, don't ever see an existing situation coming to an end. Furthermore, in three - five years they will be talking about new issues and a new bear or bull market.
He calls this tendency to take an existing condition and "superimpose it on the future", the "magazine cover" syndrome. And to illustrate this he highlights magazine covers from recent bubbles and crises including the tech bubble and the Great Recession.
First up, the front covers from 1996 - 2000 during the tech boom. "The 'road to rich' was paved with fiber optics. Sure thing," Rosenberg writes.
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Next up, the 2000 - 2002 tech bust when it seemed like the bursting bubble would never end:
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We saw it again with the 2003 - 2007 housing and credit surge:
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Then there was the 2008 - 2009 Great Recession:
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Finally, the European sovereign debt crisis:
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Instead, Rosenberg says we should look beyond the headlines of today and focus on identifying opportunities in the future.