"It's different this time, right?"
Frank Cappiello, 1998:
It may be that we will have to throw out the old history books on finance
since they haven't worked in the past three or four years. Multiples are up
but no one has ever seen a world like this: capitalism triumphant, globally,
accompanied by the ongoing restructuring of corporations to increase
profitability. Additionally, fast-moving technology as exemplified by
biotech and internet companies has created thousands of new investment
opportunities.
Sure, price-earnings multiples are up, but maybe we're at the brink of a
new valuation of equities.
Benjamin Graham, 1933:
Why did the investing public turn its attention from dividends, from asset
values, and from earnings, to transfer it almost exclusively to the earnings
trend, i.e., to the changes in earnings expected in the future? The answer
was, first, that the records of the past were proving an undependable guide
to investment; and secondly, that the rewards offered by the future had
become irresistibly alluring.
The new-era concepts had their root first of all in the obsolescence of the
old-established standards. During the last generation, the tempo of
economic change has been speeded up to such a degree that the fact of
being long established has ceased to be, as it once was a warranty of
stability.
Been there, done that. It's not different this time. |
