Human nature will never change

Amen!

Markets change.

Businesses change.

Technologies change.

Human nature is a CONSTANT.

Read Shakespeare to grok people…

— Josh Wolfe

Reminds me of something I’ve heard Jim O’Shaughnessy say often:

“At the centre of all market pricing are human beings. I joke the Four Horseman of the investment apocalypse are fear, greed, hope and ignorance, only one of which is not an emotion. Fear, greed and hope have wiped out more money than any market downturn. Because of all the foibles of human nature that are well documented by behavioural research – and now by neuroloigical research – people are always going to overshoot and undershoot when pricing securities. A review of financial markets all the way back to the South Sea company proves this out. As long as human nature doesn’t fundamentally change, we can continue to arbitrage the pricing inefficiencies it creates.”

“As long as human beings price securities, we’ve got something to arbitrage.”