I like Jesse Livermore quotes as a result of they’re typically multi-faceted.
That is considered one of my favorites:
One other lesson I realized early is that there’s nothing new in Wall Road. There can’t be as a result of hypothesis is as previous because the hills. No matter occurs within the inventory market immediately has occurred earlier than and can occur once more.
I agree with this sentiment. Human nature is the one fixed throughout all market cycles. Even AI gained’t change that.
I additionally know the inventory market construction is continually altering and by no means the identical.
Right here’s considered one of my favourite annual charts from the UBS World Funding Return Yearbook:
I nonetheless keep in mind studying The Clever Investor for the primary time and questioning why Benjamin Graham saved writing about railroad shares. Properly, it was written within the Forties and Graham grew up when railroad shares dominated the day.
That’s not the case anymore. Tech shares rule the day in America. Within the UK, it’s extra unfold out.
Possession of the inventory market is all the time altering too. This Goldman Sachs chart is one other private favourite:
Inventory market possession was once closely concentrated within the fingers of households. That’s not the case anymore.
Households nonetheless have the very best possession proportion however it’s dropped from greater than 90% in 1945 to 38% now. The fund trade controls greater than one-quarter of the inventory market. International buyers make up neatly one-fifth of the full.
Clearly, households nonetheless personal many of the shares by way of these different autos however there may be much more diversification within the possession construction. I believe this can be a good factor for the well being of the market.
Eggs are in numerous baskets now.
Management within the inventory market is all the time altering as nicely.
Common readers of A Wealth of Frequent Sense know I’m an enormous fan of efficiency quilts. Right here’s an amazing one from DFA that ranks nation inventory markets over the previous 20 years:
Who would have thought Denmark outperformed American shares over the previous 20 years?
However the true takeaway right here is how the efficiency rankings are consistently altering. Are you able to think about in case you needed to guess who the very best or worst performer was in a given yr?
The worldwide inventory market is schizophrenic and I imply that as a praise.
It wouldn’t make sense if the rankings had been the identical yr in and yr out. It wouldn’t be a lot enjoyable both.
The inventory market has to alter on a regular basis.
In any other case it wouldn’t provide buyers a threat premium.
Additional Studying:
Timeless Knowledge From Jesse Livermore
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