Often people have difficulty remembering all of the Ten Commandments. But the Fifth Commandment, “Honor your Father and Mother,” is one that many recognize right away.
The wisdom of honoring one’s parents seems self-evident: their experience, their greater knowledge, and the effort they put in to care for and raise their children is naturally worthy of respect. And we even have special days set aside for this purpose: Mother’s Day and Father’s Day. But it’s easy to forget. We seem to have attention deficit disorder when it comes to remembering the work and sacrifice of our parents as we were growing. So it’s a good thing to be reminded.
Because it’s easy to imagine that things are different now, that the trials and pressures that we face are nothing like those our parents experienced, and so their wisdom and insight just don’t apply to our current situation. But history, while not repeating itself, often does rhyme, as Mark Twain once said. The challenges and tests we experience aren’t so different from what our mothers and fathers faced, and we can learn from their success and failure.
In the same way, it’s easy to dismiss the lessons of investment history and say, “It’s different now.” In many ways, it’s always different—there is always new technology, new geopolitical challenges, and new investment opportunities. This is why the market periodically puts its faith in “go-go” young people who aren’t burdened by the wisdom of experience.
But it’s never really different. There’s no new history, only old history happening to new people. Those “go-go” periods in the ‘60s, ‘80s, and ‘90s didn’t end well. The lessons of history shouldn’t be slavishly copied, but they need to be honored and respected. And what are some of those lessons? Valuation matters, risk matters, and what has happened before will happen again—although not right away or the same way.
Honoring our parents is wise. It’s good, and good for us. Respecting the lessons of history is good for our portfolios.
Douglas R. Tengdin, CFA
Chief Investment Officer
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