
Newton's Financial Misadventures in the South Sea Bubble - christofdev
https://royalsocietypublishing.org/doi/full/10.1098/rsnr.2018.0018#d3e291
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hangonhn
The awesome folks at Extra Credit History did a great series on this:
[https://www.youtube.com/watch?v=k1kndKWJKB8](https://www.youtube.com/watch?v=k1kndKWJKB8)

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cjlars
As a fan of financial history -- and I know that's an odd thing to be
interested in -- this is the craziest story I've ever heard.

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H8crilA
Financial/economic history is incredibly important if one wants to invest
successfully. Much of the things we see in the markets had happened before,
but not necessarily in our lifetimes. For example there were entire decades in
the US history when bonds easily outperformed stocks, yet because of the last
decade your typical retail investor thinks bonds are for people that don't
want good long term gains.

"How The Economic Machine Works"
[https://youtu.be/PHe0bXAIuk0](https://youtu.be/PHe0bXAIuk0)

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herdrick
It's not just the last decade. Since the mid-1980s the conventional wisdom has
been that stocks > bonds for long term gain.

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cbanek
"I could calculate the motions of the heavenly bodies, but not the madness of
the people." \- Newton

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seiferteric
the bitcoin of his time.

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H8crilA
Also the "tech" of his time.

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JohnJamesRambo
[https://en.wikipedia.org/wiki/Dunning–Kruger_effect](https://en.wikipedia.org/wiki/Dunning–Kruger_effect)

Newton got hit hard by this I think.

I’m also always reminded of Rainman trying to predict the Wonder Wheel in
Vegas and not realizing it plays by very different rules than blackjack, where
you can count the cards and make predictions.

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melling
Not sure it’s a Dunning-Kruger Effect. Investment bubbles drag people in. He
thought it was overvalued when he doubled his money and got out. He was
probably right but the market stayed irrational. Looks like he was buying the
dips on the way down too.

“Tales abound of how he invested early, and cashed out with 100% profits as
market valuations went to what seemed to him unjustified levels. However, as
prices continued to advance, he supposedly invested again at the peak and lost
most of his fortune in the crash that followed”

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H8crilA
This is a lesson to not assume you're good at investing if otherwise
intelligent.

The Intelligent Investor, by Graham, brings up the archetypical example of a
doctor/dentist and his financial misadventures. His (or her) disadvantage is
that they're obviously intelligent which pushes them to be overconfident in a
field in which they have zero experience. Overconfidence breeds poor risk
management and eventual trouble.

