🎧The Rich Returns of Investing in US Financial History - with Author Mark J. Higgins
Investing is all about future returns but the value of historicism is underrated
Hi! It’s George from Investorama - I’ll be back soon to continue the series on Private Equity but I’ve got a new podcast conversation that I’d like to share and it’s a fundamental one. We look back at the WHOLE US Financial History with author Mark J. Higgins.
Here’s a 90-second trailer.
If you’re ready for the full episode, here are the links: YouTube, and audio.
It was a fun conversation, again I love that I can speak to the authors of the book I love! We also went through the history of the podcast itself, I asked Mark his thoughts on quotes from previous guests. He mostly agreed - but not always - so expect some hot takes.
Below you’ll see selected quotes & thoughts from a conversation spanning from Alexander Hamilton to RoaringKitty!
4 Quotes
We take stuff that exists and functions for granted, like Central Banks and Regulations, and we only see their imperfection. They often annoy us:
My belief is that cryptocurrency is largely a reaction to scepticism of the need for a central bank. And people forget we've had a central bank now in the United States and also in Europe, but we've had a few central banks since. When important institutions, and laws have been around for a while, people forget that they're necessary. It's like going outside in a rainstorm. You have an umbrella at home and be like: why do I need this umbrella? I'm not getting wet.
This is an important theme in the book showing we had the first bank of the United States, it disappeared, and it came back. It was, pretty disastrous without it. People who are sceptical of central banking don't understand that without it, things can get pretty, pretty messy.
I had to ask Mark’s views on the ‘democratization of alternatives’ which I often discuss here and we both agree that ‘democratization’ is the wrong word. Mark saw the issue from a cycle perspective:
By the time private funds are moving down the market to individuals, the cycle is toward the end. And that's why I think it's a disservice to investors.
Mark’s also an investment consultant for institutions and that’s the hat he put on when I asked about investor education:
[Education] is one of the most critical and neglected tasks of advisors. And the reason it's almost more important for institutions is because they're unstable. Their governance is unstable. They're constantly rotating trustees. They have very limited time and providing high-level education on what they can and can't do is more neglected than ever.
The behavioural benefits of studying history for investors:
And you've seen how bad things have been and they've been worse much worse than they are right now It's hard to get spooked anymore and it doesn't necessarily enable you to profit from envisioning the future, but it does enable you to have a calm and to help others have calm in the wake of what seems like unprecedented events when they're really not.
Thank you, saw the trailer, awesome, definitely worth it the full segment! Thank you, kudos!