“I hear and I forget. I see and I remember. I do and I understand” – Confucius
Confucius was full of wisdom. The ancient Chinese philosopher and scholar continues to impact society today with his aphorisms and proverbs, the most famous of which is the “Golden Rule” which most of us learned as children (his version read “Never impose on others what you would not choose for yourself.”)
The quote above reflects man’s inability to learn from hearing or seeing – only by experiencing an event, does man understand. This teaching is particularly relevant to financial markets: business cycles, debt cycles, financial crisis, economic policies and investor behavior. Despite a wealth of financial history at our fingertips, in aggregate, investors tend to repeat the same mistakes over and over again, always thinking “this time is different”.