Charting the Lessons of History

I was in New York last week visiting clients, also for interviews with Bloomberg and I’ve stayed downtown the last couple trips, partly for convenience but also just to take in the history of the city.

Ever since I first read Eric Homberger’s The Historical Atlas of New York City, I’ve been fascinated by how New York evolved from the early settlements on the island originally known as Manahatta to the thriving city we know today.

Streets downtown are named for a myriad of reasons, such as the original wall of the Dutch settlement (Wall Street), the fact that the natives ate tons of oysters (Pearl Street), and a big road which the Dutch called Heerestraat or Heerewegh (Broadway).

Me with the Buttonwood Agreement, signed by 24 stockbrokers in 1792.

Me with the Buttonwood Agreement, signed by 24 stockbrokers in 1792.

I’ve always appreciated the way that charts can serve as a history lesson for the financial markets. Until augmented reality allows us to visit New York in 1911, we’ll have to rely on books to help us understand the financial conditions of the period and charts to show us what happened leading up to and after pivotal events in history.

Why does it make sense to study what happened over a hundred years ago, when the world is so different? Because human behavior is consistent.

There will always be greed and fear, euphoria and despair, upside and downside. The emotions that truly make us human are the ones that will continue to drive our decisions for a great many generations.

That, my friends, is why the history lesson of charts needs to be a part of your investment process.


Disclaimer: This blog is for educational purposes only, and should not be construed as financial advice.  Please see the Disclaimer page for full details.