NEW ERA THINKING

“I’ve tried not to analyse companies by telling a story and then finding data to support it” Chris Davis

“When valuations aren’t running in our direction we don’t say our models aren’t working and we don’t change them” Joel Greenblatt

“How does one reduce the margin of error while recognising that investments do, of course go down as well as up? The answers are not absolutely clear cut but they certainly include refusing to compromise by subtly changing a question so that it shapes the answer one is looking for” Peter Cundill

"When we are wrong or when fundamentals turn against us, we readily admit we are wrong and we reverse our course.  We do not seek new theories that will justify our original decision.  We do not let errors fester and consume our attention.  We sell and move on" Ed Wachenheim

"New eras usually ride into town on the back of a horse mistaken for a golden stallion, transformed momentarily by the brilliance of the afternoon sun.  Incredulous onlookers (investors) are thinking riches, when all that's left when the illusion fades is manure"  Frank Martin

“When there is a discrepancy between my expectations and the actual course of events, it doesn't mean that I dump my stock. I re-examine the thesis and try to establish what has gone wrong. I may adjust my thesis or I may find that there is some extraneous influence that has come into the picture. I may end up actually adding to my position rather than dumping it. But I certainly don't stay still and I don't ignore the discrepancy. I start a critical examination. And generally, I'm quite leery of changing my thesis to suit the changed circumstances, although I don't rule it out completely.” George Soros

“Over time, I’ve noticed that investors tend to invoke “new economies” when they want to justify actions that are unjustifiable by conventional analysis. Rather than heralding a new era, the shift in attitudes toward risk exposed a neglected but hugely important attribute of all markets, past, present and future; namely, the role of psychology” Leon Levy

“Every once in a while, an up-or-down-leg goes on for a long time and/or to a great extreme and people start to say "this time it's different." They cite the changes in geopolitics, institutions, technology or behaviour that have rendered the "old rules" obsolete. They make investment decisions that extrapolate the recent trend. And then it turns out that the old rules still apply and the cycle resumes. In the end, trees don't grow to the sky, and few things go to zero.”   Howard Marks

“High levels of greed sometimes cause new-era thinking to be introduced by market participants to justify buying or holding overvalued securities. Reasons are given as to why this time is different from anything that came before. As the truth is stretched, investor behaviour is carried to an extreme. Conservative assumptions are revisited and revised in order to justify even higher prices, and a mania can ensue” Seth Klarman

"I have lived through or studied hundreds, possible\y even thousands of bull and bear markets.  In every bull market, whether it is IBM or oats, the bulls always seem to come up with reasons why it must go on, and on and on.  I remember hearing hundreds of times "We are going to run out of supply", "This time it's going to be different", "Oil has to sell at $100 a barrell." "Oil is not a commodity".  Well, damn, for 5,000 years it has not been different from every other commodity".  Jim Rogers

 "The four most dangerous words in investing are: 'this time it's different'" Sir John Templeton

 “At the end of the day, markets will always be driven by greed and fear, valuations will always swing from too cheap to too dear, and there will always be a new generation to rationalize why this time it is different.  But I guarantee that for as long as I live I will always be able to find a chart that will look like another chart from another era, showing once again how Mr Market ran the full gamut of emotions from bottom to top, and top to bottom all over again.  As it is written, there is nothing new beneath the sun or Wall Street” Paul Tudor Jones

"Another tool Mr. Market uses to the detriment of investor success is to convince the investor that "This time is different".  Mr. Market cajoles you to believe that we are truly in a new era that requires different tools and a different way to see the world.  Mr. Market will encourage you to change your perspective from cash flow and value to some new paradigm that may prove impossible or unsustainable.  Every invesrtor will consider the words "this time is different"at least a few times over their investment lifetime, most typically in the fear of panic and the euphoria of rising tides" Christopher Begg

"We try not to have many investing “rules,” but there is one that has served us well: If we decide we were wrong about something, in terms of why we did it, we exit, period. We never invent new reasons to continue with a position when the original reasons are no longer available." David Einhorn

"One of the best ways to lose money over time is by owning stocks with changing investment rationales"  Ragen Stienke

"Some grasp of history's abundant lessons becomes especially relevant in the examination of the goings-on in the capital markets where emotions, particularly at extremes, run high - and reason often is overwhelmed.  Careful study of the past would suggest that it's quite appropriate to argue that there are no "new eras" in finance, only "new errors"  Frank Martin

"Ridiculous as it may seem to most of us today, in the period from 1927 to 1929, the majority of the financial community actually believed we were in a 'new era'" Phil Fisher

"Often investors invent a thesis to justify a trend: "Outsized returns can be realized by purchasing growth stocks regardless of their PE ratios because their PE ratios are not relevant over the longer term." Or "New Economy internet stocks will continue to grow exponentially - and Old Economy stocks are dead and should be sold." In my opinion, booms become particularly dangerous when the theses that justify the booms generally become uncritically accepted by investors. Then, investors are prone to become complacent and to accept the excesses as new norms. History books are full of booms and busts, and booms and busts likely will continue to occur because of the proclivity of humans to become uncritical participants in trends and fads"  Ed Wachenheim