Skip to main content

Posts

Showing posts from January, 2010

Notable Gaffes from a Decade Now Gone

Investors are often confronted with unexpected developments, and the last decade offers an abundance of examples. Ten years ago, for example, Brazil was on the verge of a currency collapse, and General Electric was among the largest and most admired firms on the planet. Who would have thought that Brazilian stocks would soar sevenfold during the subsequent ten-year period, while GE shares fell 70%?

A lucky few may be able to exploit such extreme outcomes to enhance their investment results. But history offers compelling evidence that shows that those making concentrated bets on companies or countries are more likely to get blind-sided by unpredictable events. Markets have 101 ways to teach us the virtues of diversification.

While sifting through our stacks of news clippings in preparation for our customary review of the year's events, we came across a number of tidbits from the more distant past that offer some lessons. These quotes turned out to be oopses by those who spoke or w…